IMF Survey : Security, Stability Measures Needed to Fix Fragile States
March 29, 2013
- Challenges of managing the economy and overcoming fragility are universal issues
- Establishing security, systematic institution building key ingredients to reform
- Joint efforts by policymakers, leaders, and citizens important to transition success
A country suffering any or all of the following adverse conditions—political and economic instability, poverty, civil disorder, terrorism, human trafficking, or disease—can be labeled a fragile state. These fragile situations are not limited to low-income countries. The issue of governance is a concern for countries around the world.
TRANSITION AND GROWTH
What policies then, can a fragile state pursue in order to become a fully functioning nation that meets the aspirations of its people?
Clare Lockhart of the Institute of State Effectiveness in Washington, DC, and co-author of the book, Fixing Failed States, believes that a state can become a functioning one when it successfully performs 10 basic functions. In an interview with IMF Survey, she outlines some of these functions, and concludes that the problems of a fragile state are universal, and can affect any state at any time.
IMF Survey: What is the definition of a functioning versus a fragile state?
Lockhart: The definition of a functioning state is one that can perform 10 functions—this is based on interviews with citizens around the world. The first of these is the legitimate monopoly on the means of violence—and that is the one that was traditionally the definition of the state.
But what we are finding today is that real legitimacy comes not only from that function, but the way the state performs another set of functions: managing the public finances in a sound way; investment in human capital; managing infrastructure services; how the state approaches the rule of law; whether the rulers themselves are subject to the rule of law; and how they manage the assets of the state.
The state must now manage its natural capital—minerals, water, or forestry—as well as the intangible assets of the state, for example, the management of monopolies and licenses.
A functioning state is one where these mechanisms are working well, not only individually, but the way in which they interconnect. In contrast, a state is fragile when it is not serving its population well, or where one or more of these functions have really eroded or are not being performed properly.
IMF Survey: Given this definition of what constitutes a failed or fragile state, approximately how many such states exist today?
Lockhart: I think that really depends on how you measure and count them. There has been a proliferation of different indices, and depending on which one you use, there are somewhere between 30 and 60 such states in the world today. As we are discovering—and especially since the financial and fiscal crisis of recent years—governance is an issue for countries everywhere. So, a lot of the questions about the failure of a state to manage the economy and so on are not confined to one set of countries. Rather, these failures are universal.
IMF Survey: What are the priorities for fragile states if they want to transition beyond their fragile status?
Lockhart: I think there are several lessons that emerge. In the cases that we have looked at, one of the key lessons is establishing security first. When there is insecurity, the key demand of citizens is for security. As someone put it to me: “We can’t think of anything else if we don’t think we can walk to the bread shop at the end of the road without getting shot in the back of the head.” It is really that first need to be safe and secure, and for one’s family to be safe and secure.
The reformers who have done their transitions right have focused first on establishing security—but we also know that it is a cycle. It can be a vicious cycle or it can be a virtuous cycle of establishing security.
So, what else did the reformers do? They took a systematic approach to institution building. They did not try to create a Western state overnight, or maybe even at all. Instead, they thought about what institutions do, which policy areas should be focused on first, and what could wait for a later time. And at the heart of this was building the human capital—investing in the people of the country with the right skills to equip the country.
So, it was a question of mapping out, for example: how many engineers are needed? How many doctors? How many teachers? How many accountants? In short, making sure that there were people in that country who are equipped with those skills, rather than relying on an enormous influx of technical assistance from the outside. Certainly they did use technical assistance, but they used it carefully and very sparingly.
IMF Survey: What would you recommend the international community do to assist fragile states in their building efforts?
Lockhart: Over the years we have seen a huge range of different responses. The humanitarian community sees the immense suffering and loss of life or injuries that come as a result of a disaster or a failure of the state to manage particularly health and education sectors, and they respond through humanitarian assistance. Then, in some cases, and especially when security breaks down, we have seen security actors come in to try and help establish stability.
In many cases we have seen that when humanitarian and development actors have responded to a state’s failure in a crisis, sometimes their responses are not as effective as they could be and sometimes can be part of the problem. We have heard recently that President Michel Martelly of Haiti did a stocktaking of the response to the earthquake, and he has expressed his disappointment publicly that the promises made did not materialize.
IMF Survey: Can you give us an example of a previously fragile country that actually made the transition?
Lockhart: Certainly. We have looked at a range of country examples, and some of the examples are today so successful that people have commented that those countries were always going to succeed. But if you go back to the newspaper reports at the time those countries were experiencing crises, people were saying that the transition was never going to work. This would include South Korea, Singapore, Spain (after Franco), and some countries in Latin America. So, I think today it is easy to take success for granted.
What we have been trying to do at the Institute for State Effectiveness is to understand and study what it was in those transitions, in those transformations, that policymakers got right. How did they move from conflict to peace? How did they move from poverty to prosperity? From instability to stability? We do not think that there is a magic formula. There is certainly no cookie-cutter approach, but there is a set of commonalities in the way that policymakers, leaders, and their citizens approached the challenge to get it right.