Pictures of a gift shop in northern Iraq selling a whole range of souvenirs with Islamic State logo on them have emerged on social media, suggesting the extremist group has made yet another step to becoming a fully fledged state.

Following the recent publication of a tourist guide on its realm, the terrorist group Islamic State (IS, formerly ISIS/ISIL) is providing the on the ground infrastructure that a potential sightseeing traveler would expect from a major city. Images appearing in Arabic social media on Sunday show a souvenir shop in Mosul filled with IS black flags, baseball caps and clothing featuring the group’s logo.

READ MORE: ISIS 'travel guide' compares self-proclaimed caliphate to holiday

Side by side with them Kalashnikov assault rifles can be seen, as well as gun accessories and swords similar to those used in some of the notorious execution videos that IS frequently releases.

Mosul is the de-facto Iraqi capital of Islamic state. The lightning-strike seizure of the city in the summer 2014 provided the previously relatively unknown group with a few billion dollars of cash stored in local banks and a large arsenal of US-provided weapons, including tanks and helicopter gunships that the fleeing Iraqi army left behind.

IS declared itself a state shortly afterwards, a claim that was internationally rejected as ludicrous. In a year that past since then the entity that sprawls across a great part of Syria and Iraq has become relatively state-ish, producing a functioning bureaucracy to back its fighters in the field. It’s a brutal authority that expels or slaughters those it sees unfit, but it has found things to offer the subjugated population.

The militants for example maintain a form of social security, covering damages sustained from warfare – either from its own fighters requisitioning vehicles and other resources or suffered from airstrikes of the US-led coalition.

“One thing I’ve repeatedly heard from Syrian refugees is that ISIL moves very quick to restore basic services and provide compensations to civilians whose property has been damaged by the coalition airstrikes. There is a wide-spread perception in the contested areas of Syria that coalition airstrikes are doing more damage to civilians than they are to ISIL targets,” Mara Revkin, political science PhD student at Yale University, told RT.

READ MORE: Fully functioning state or band of ruthless thugs?

IS has voiced plans of introducing its own currency. The group brings not only the back-to-basics version of Islam for its ideology, but also a large skill pool of former Baathist functionaries, who saw their livelihoods hurt under the US-backed Shiite government and are making a bid for a comeback as part of IS. Former Saddam officials provide the talent for Islamists’ military HQs and civilian administrations.

“This is a group that is absolutely committed to developing a state, expanding their state, so this is not merely symbolic. It’s both in developments and it is also a state that’s on a continuous war-time footing, fighting a war on multiple fronts, so I think it’s much better understood as an ongoing revolutionary organization,” Andrew March, associate professor of political science at Yale told RT.

Keeping the machine running costs, and IS group’s budget is estimated to get up to $100 million in revenue. A large portion of it comes from smuggling oil through Turkey or Iraq. Taking toll from passing caravans trafficking illegal goods is another one. A big chunk comes from squeezing wealthy people by kidnapping them and holding for ransom and other forms of raiding.

“Islamic State has built an empire, functioning as both a company and a state: selling oil and trafficking precious art while building a formidable army,” Middle East political analyst Catherine Shakdam told RT.

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Opening souvenir shops, issuing IDs and minting currency are all important elements in building that empire, analysts believe, suggesting that more attention should be given to the role that civilian support plays in the rapid expansion of IS.

“The extent to which IS continues to expand and control new territory depends not so much on the actions of external actors like the Coalition, but primarily on IS success in winning support and cooperation from civilians in the areas it’s already controlling and governing,” Revkin says.