Capital generated in two American states (4)
I believe the answer is:
riga
'capital' is the definition.
(Riga is an example)
'two american states' is the wordplay.
'two american states' means two replacements for 'american state'.
'american state' becomes 'ri' (abbreviation for Rhode Island).
'american state' becomes 'ga' (abbreviation for Georgia).
'ri'+'ga'='RIGA'
'generated in' acts as a link.
(Other definitions for riga that I've seen before include "A rig in Latvia" , "Baltic capital city" , "Baltic port" , "port in Latvia" , "Capital city of Latvia" .)