Richard Rosecrance a population that neither may be fully able to control.Similar rival- ries beset Rwanda and Burundi and the factions in Liberia These examples,however,look to the past.Less developed coun- tries,still producing goods that are derived from land,continue to covet territory.In economies where capital,labor,and information are mobile and have risen to predominance,no land fetish remains. Developed countries would rather plumb the world market than ac- quire territory.The virtual state-a state that has downsized its terri- torially based production capability-is the logical consequence of this emancipation from the land. In recent years the rise of the economic analogue of the virtual state-the virtual corporation-has been widely discussed.Firms have discovered the advantages of locating their production facilities wherever it is most profitable.Increasingly,this is not in the same lo- cation as corporate headquarters.Parts of a corporation are dispersed globally according to their specialties.But the more important devel- opment is the political one,the rise of the virtual state,the political counterpart of the virtual corporation. The ascent of the trading state preceded that of the virtual state. After World War II,led by Japan and Germany,the most advanced nations shifted their efforts from controlling territory to augmenting their share of world trade.In that period,goods were more mobile than capital or labor,and selling abroad became the name of the game.As capital has become increasingly mobile,advanced nations have come to recognize that exporting is no longer the only means to economic growth;one can instead produce goods overseas for the foreign market. As more production by domestic industries takes place abroad and land becomes less valuable than technology,knowledge,and direct investment,the function of the state is being further redefined.The state no longer commands resources as it did in mercantilist yester- year;it negotiates with foreign and domestic capital and labor to lure them into its own economic sphere and stimulate its growth.A na- tion's economic strategy is now at least as important as its military strategy;its ambassadors have become foreign trade and investment representatives.Major foreign trade and investment deals command executive attention as political and military issues did two decades [46] FOREIGN AFFAIRS Volume 75 No.4