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Can international interventions build states? Most existing scholarship focuses on national state capacity, missing the importance of local institutions in the post-conflict statebuilding process. Scholars have shown that local governance institutions that fit endemic needs, but incorporating local institutions in the statebuilding process risks elite capture and sabotage. Past empirical findings are mixed. I argue that local institutions have greater legitimacy than national governments in the post-conflict statebuilding context, and this legitimacy advantage allows interventions to effectively rebuild these institutions’ governance capacity. To test my theory, I examine a village-level statebuilding intervention by the United Nations Development Programme (UNDP) in post-civil war Nepal. Based on my quantitative analyses with a novel geocoded dataset, I find that the intervention helped increase local state capacity but not national state capacity. I complement my findings with qualitative interview data from former village leaders who implemented these projects in Nepal’s Rolpa district. My project makes two primary contributions. First, this novel work highlights the critical importance of working with local governments in post-conflict statebuilding. Second, it is the first extensive analysis of UNDP's statebuilding work and its efficacy. UNDP's global prominence makes it a crucial case for the viability of local capacity building by setting both a high standard and a limit for what should be expected. Together, these contributions will point to more effective strategies for international interventions.