In terms of economic development, the Austro-Hungarian monarchy lied at the crossroads of the more developed western and northern parts of Europe and the less developed southern and eastern parts of Europe. This was also clearly reflected in the levels of development within the Austro-Hungarian monarchy. The more industrialized the lands, the more developed they were. The development lags could only start to narrow when also less developed lands had started with a more intensive process of industrialization. On the basis of the comparison of a successful economic development of Hungary and unsuccessful economic development of Galicia and Dalmatia, the author concludes that only the lands which increased the importance of commerce in economy and become part of the process of globalization could eventually succeed. The role of the state in this was to build an efficient transport and financial infrastructure and to provide for stable fiscal and monetary systems.