This book offers a new governance framework for understanding how countries with limited institutional capacity can pursue economic catch-up in the digital age. This book introduces the concept of the Developmental Network State (DNS) to explain how learning, coordination, and embeddedness enable capability development under conditions of constraint. Focusing on transitional economies in Southeast Europe, it examines how fragmented institutions, donor dependence, and political volatility shape technological upgrading and industrial transformation. Drawing on extensive fieldwork, stakeholder interviews, and comparative analysis, the book explores digital entrepreneurship, agri-food upgrading, and integration into automotive supply chains in low-capacity environments. It highlights themes such as governance as a meta-capability, industrial policy under digital disruption, and the role of diasporas and donors in shaping development trajectories. This interdisciplinary study will appeal to researchers, graduate students, policy advisors, and development practitioners interested in industrial policy, innovation systems, and governance reform in latecomer economies.