Galton's problem raises questions about the nature of explanation in cross-national research using aggregate data. When political units such as states interact, to what extent can correlations between two traits or behaviors, such as socioeconomic development and political stability, be explained in terms of functional relationships within political systems, and to what extent are they the result of diffusion or borrowing among them? This article explores the logic of Galton's problem and then evaluates several empirical solutions to it, using data drawn from three different types of crossnational samples. The solutions juxtapose explanations based on internal (functional) relationships and external (diffusion) patterns, and suggest that previous research which has ignored diffusion may have led to incomplete or incorrect conclusions.