The paper reviews the current discourse on state fragility and examines the definitional basis for this label. It puts forward a model for defining state fragility that is based on the state's capacity, which is its capability to protect itself, deliver services and manage economic risks and the state's resilience, which has to do with the management of social relations and political risks. This model also takes into account both middle-income and low-income countries. The nature and extent of state fragility here is a function of the relationship between state capacity and resilience. The relationship between state fragility and development and security outcomes is addressed with reference to the impact of initial conditions. The paper concludes by examining the resulting aid allocation on the basis of the existing state fragility discourse and puts forward an alternative aid allocation structure based on the proposed model for state fragility, and finds significant differences to the existing arrangement.