Category Archives: Economic Development
Are the G7+ and Donors Heading for a Clash?
The 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):
- Legitimate politics – Foster inclusive political settlements and conflict resolution
- Security – Establish and strengthen people’s security
- Justice – Address injustices and increase people’s access to justice
- Economic foundations – Generate employment and improve livelihoods
- 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
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”
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…)
More on Economic Development, Foreign aid, Governance, Policies
Discordant Development – Progress That Increases Instability
Samuel Huntington argued in his 1968 classic Political Order in Changing Societies that rapid development could be highly destabilizing:
Social and economic change—urbanization, increase in literacy and education, industrialization, mass media expansion—extend political consciousness, multiply political demands, broaden political participation. These changes undermine traditional sources of political authority and traditional political institutions; they enormously complicate the problems of creating new bases of political association and new political institutions combining legitimacy and effectiveness. The rates of social mobilization and the expansion of political organization are high; the rates of political organization and institutionalization are low. The result is political instability and disorder. The primary problem of politics is the lag in the development of political institutions behind social and economic change.
Richard Joseph, a Senior Fellow at the Brookings Institution and a Professor at Northwestern University, discusses a similar point in a recent article on Africa. In it, he introduces the very useful phrase “discordant development,” defining it as:
More than just “unequal development,” but rather how deepening inequalities and rapid progress juxtaposed with group distress can generate uncertainty and violent conflict. (more…)
Prioritization — The Easiest Way to Improve Governance
Fragile states have limited capacity to govern. They have few highly trained policymakers, few managers able to organize departments and ministries, and few officials able to implement decisions. They have very limited financial resources and little prospect (unless they have a lot of natural resources) of becoming self-sustaining anytime soon. Why then do we ask them to do so much?
These deficits are not going away anytime soon. As Lant Pritchett and Frauke de Weijer pointed out in their paper on capability traps, fragile states are:
far from any threshold of “good governance”; at their pace or average pace of progress it would take very (to infinitely) long to reach a threshold; even at very to extremely optimistic accelerations of the pace of progress . . . the time from fragile states to reach solid levels of governance is measured in decades, not years.
Yet, such countries are expected to do more or less everything much more developed countries do. They must deliver adequate public services to all their people, adopt and enforce an enormous number of laws and regulations, and meet international standards in a wide range of areas. If they receive substantial sums of foreign aid, they must deal with each donor on every project and meet all their specific requirements. Is any of this realistic? (more…)
Is the Development Community’s Focus on Fighting Poverty Passé
Fighting poverty is the most important issue to the development community. It stirs passions, brings in the money, attracts the most attention—and thus sits at the top of everyone’s agenda.
When the new head of the World Bank, Dr. Jim Yong Kim, engages the wider public, he asks, “What Will It Take to End Poverty?” When the prime minister of the United Kingdom touts his accomplishments in the development field, he writes about “Combating Poverty at Its Roots.” And when NGOs fundraise, they stir your heart by telling you, “Sponsoring a child is the most powerful way you can fight poverty.”
But given great reductions in absolute poverty (from 55 to 22 percent of the developing world’s population over the past three decades) and great improvements in the lives of the poor, is this focus on poverty reduction detracting from more important issues? (more…)
More on Economic Development, Foreign aid, Governance, Poverty
Development: Solving Collective Action Problems
There has been a lot of deep thinking about development problems over the past decade or so. But for the most part, a better understanding about how countries progress has not translated into dramatic changes in the activities aimed at promoting it.
International development agencies now say they emphasize politics and seek to find “best fit” solutions tailored to individual country circumstances. However, as David Booth writes in a recent Africa Politics and Power Policy Brief,
Much of the newer governance programming looks much like the old kind. Even the most reflective country activists and the best governance advisers have trouble imagining what to do differently.
Improving governance in developing countries in Africa and beyond requires that international actors undertake much greater reforms in how they operate than has been contemplated up to now. Many of the assumptions about development need to be challenged and overturned. (more…)
More on Africa, Economic Development, Foreign aid, Governance, Review
Social Exclusion Case Study: Pakistan
Pakistan is arguably the world’s most important fragile state, but many of its problems are not well understood. Security problems dominate headlines, but the country’s real troubles more often than not float beneath the surface unknown even to those trying to help the country.
A good example of this is the issue of social exclusion. Although it receives almost no attention internationally, social exclusion—in its various forms—plays a major role in the country’s problems. By systematically disadvantaging large portions of its population, Pakistan’s elites reduce the legitimacy of the state, encourage extremism against it, weaken the impetus to enhance public services, and contribute to long-term demographic and environmental threats.
Horizontal social exclusion is one of the two most important drivers (with weak government) of state fragility worldwide, yet rarely receives the attention it deserves in international discussions of fragile states. Whereas vertical inequity between individuals plays a major role in debates on development, horizontal inequity between groups is often not even measured.
A recent Norwegian Peacebuilding Resource Center (NOREF) Policy Brief on social exclusion in Pakistan is therefore a very welcome addition to the literature on the country. By outlining the country’s main axes of social exclusion and how they affect stability and governance, it does a great service to anyone working on the country. I strongly recommend the analysis part of the paper both as a backgrounder for those working on Pakistan and as a case study for how social exclusion affects fragile states in general. (more…)
More on Economic Development, Foreign aid, Governance, Identity, Review, South Asia
Political Settlements: Summarizing the Latest Research
How useful is the concept of political settlement? Not very, according to a recent post by Mick Moore over on the Institute of Development Studies’ Governance and Development blog. Taking particular issue with the lack of consensus regarding definition, Mick questions the legitimacy of the concept, closing with a somewhat pessimistic evaluation of its added value.
To be sure, definitions of political settlement abound, and while many are simply variants revolving around a core theme, others are most certainly competing. To quickly caricature what I see as the biggest ‘battle’ in this war of definitions: political settlement as arrangement of political power vs. political settlement as outcome of a peace process. In these circumstances, confusion is inevitable.
But I disagree with Mick in his assessment of how far the concept of political settlement takes us. As documented by DFID’s Will Evans, recent years have seen the development of a sophisticated understanding of what political settlements are about, shifting from a narrow focus on ‘bargains’ and ‘pacts’ between elites to a broader consideration of the way in which organisational and political power is organised, maintained and exercised (who is included, what are the conditions that determine in/exclusion?). And, despite the multiplicity of definitions, Will identifies a number of ‘common points’, including: (more…)
Can We Measure Politics and Political Development?
Measuring how countries perform is all the rage. Everyone from the World Bank to Bertelsmann to Africa’s most famous entrepreneur does it, producing indices on things like how competitive economies are, how hungry populations are, how free the press is, how risky investments are, and how corrupt public sectors are.
Many of these indices are directly relevant for people working in development. They help countries determine how they compare with other states and where they ought to improve their performance. And they help aid agencies decide where and how to invest their resources.
Indicators tracking everything from GDP per capita to poverty to governance are ubiquitous across the field, especially among international professionals. Such numbers are used to determine need, priorities, and strategies (such as whether a government ought to be funded directly).
But do the indicators that have the greatest influence measure the right things? Are they focused on the issues that are most important to development? Can they predict how governments work or how countries will evolve in the future? (more…)
