Are the g7+ and Donors Heading for a Clash?

g7+ donors foreign aidThe g7+ group of 18 fragile and conflict-affected states has joined together to share experiences and promote a new development framework in what are the most difficult of circumstances. Supported by the International Dialogue on Peacebuilding and Statebuilding, the group achieved a major breakthrough at the Busan High Level Forum on Aid Effectiveness in November 2011—an agreement on a New Deal for Engagement in Fragile States. A major part of this is a new orientation to the relationship with donors.

The New Deal priorities what fragile states themselves think are the most important issues to building peaceful and prosperous societies by identifying five Peacebuilding and Statebuilding Goals (PSGs):

  1. Legitimate politics – Foster inclusive political settlements and conflict resolution
  2. Security – Establish and strengthen people’s security
  3. Justice – Address injustices and increase people’s access to justice
  4. Economic foundations – Generate employment and improve livelihoods
  5. Revenues and services – Manage revenue and build capacity for accountable and fair service delivery

These are meant to frame a country-led, inclusive way of setting national goals and establishing a national development plan. This, in turn, is meant to increase country-donor harmonization and donor co-ordination. (more…)

Power and Politics in Pakistan: A Limited Access Order

Pakistan Political Economy Foreign Aid

The Limited Access Order (LAO) conceptual framework is an excellent way to understand why developing countries work the way they do, analyze their political and economic dynamics, and formulate policy ideas appropriate to their context. Its focus on power, violence, rents, and elite bargains provides far greater explanatory and predictive power than the standard template that uses developed countries as a model for how countries ought to work. As such, everyone in the development field working in a policymaking role should make use of it.

Created by Nobel Prize winner Douglass North, John Wallis, Steven Webb, and Barry Weingast, the LAO framework argues that:

No one, including the state, has a monopoly on violence . . . An LAO reduces violence by forming a dominant coalition containing all individuals and groups with sufficient access to violence . . . The dominant coalition creates cooperation and order by limiting access to valuable resources – land, labor, and capital – or access [to] and control of valuable activities – such as contract enforcement, property right enforcement, trade, worship, and education – to elite groups . . . The creation and distribution of rents therefore secures elite loyalty to the system, which in turn protects rents, limits violence, and prevents disorder most of the time. (more…)

What the World Bank Does Not Understand About “Doing Business”

World Bank Doing Business

In its 10-year history, the World Bank’s Doing Business Report has achieved enormous influence. The annual study, one of the flagship knowledge products of the World Bank, is the leading tool to judge the business environments of developing countries, generating huge coverage in the media every year. Several countries—such as Rwanda—have used it as a guide to design reform programs. For its part, the Bank has advised over 80 countries on reforms to regulations measured in the DB. Its influence stretches even to academia, with over 1,000 articles being published in peer-reviewed journals using data in the index.

But does it focus on the most important issues for companies in less developed countries?

Based on my own almost 20 years of experience doing business in places such as Nigeria, Turkey, and China, the answer is no. (more…)

Social Covenants: The Missing Ingredient in State Building Efforts

Loya Jirga

Political theorists have for the most part focused on the state when thinking about how to make countries work better for their populations. This has naturally led to a concern with state-society relations, how governments are chosen and run, and institutions. There is wide consensus that social contracts play the central role in state building.

This thinking has heavily influenced how the international community approaches fragile states, post-conflict situations, and transitions as well as development in general. As the OECD/DAC explained in Concepts and Dilemmas of State Building in Fragile Situations:

Fragility arises primarily from weaknesses in the dynamic political process through which citizens’ expectations of the state and state expectations of citizens are reconciled and brought into equilibrium with the state’s capacity to deliver services. Reaching equilibrium in this negotiation over the social contract is the critical if not sole determinant of resilience, and disequilibrium the determinant of fragility. [page 7]

This focus on the state shapes responses to crises in places such as the Democratic Republic of the Congo, Libya, Syria, and Afghanistan, compelling the international community to prioritize the establishment of a transitional regime and fast track elections under the belief that this is the sole way to create legitimacy no matter the circumstances or the context.

But many of these countries have deeply-entrenched problems that a focus on the state cannot solve. Different religious, ethnic, and clan groups do not work together well, and see any competition for power as a zero sum game for exclusive control of the state. Government is weakly institutionalized, and unable to act as an independent, equitable arbitrator between different interests. Judges and officials are beholden to personal relationships, power politics, or money (and sometimes all three). In such places, winners of elections rarely see it as their duty to serve all their people, and often define their rights as whatever they can get away with—negating whatever social contract the process was supposed to establish. (more…)

What the OECD Does Not Understand About Fragile States

OECD fragile states

The Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) and its International Network on Conflict and Fragility (INCAF) do an admirable job bringing together policymakers, collecting and synthesizing information, and helping set the agenda for donors.

But, as exemplified by Emmanuel Letouzé’s (lead author) and Juana de Catheu (co-author)’s recent report Fragile States 2013: Resource Flows and Trends in a Shifting World, its analysis of fragile states is flawed in a couple of important ways. (more…)