{
  "title": "How To Escape The Perils of Fragility",
  "publication": "IMF Blog, August 3, 2021",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2021/08/03/how-to-escape-the-perils-of-fragility",
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  "summary": "Already facing huge development needs, the COVID-19 pandemic is exacerbating the challenges facing fragile and conflict states—a group of currently about 40 countries trapped in cycles of low administrative capacity, political instability, conflict, and weak economic performance.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Authors: Olusegun Akanbi, Kenji Moriyama, Keyra Primus\n- Publication date: August 3, 2021\n- Subject: Fragile and conflict states—currently about 40 countries—facing cycles of low administrative capacity, political instability, conflict, and weak economic performance.\n- Dataset analyzed: 196 countries between 1979 and 2018.\n- Empirical tools referenced: staff working paper and two charts measuring changes in probabilities of entry into/exit from fragility."
    },
    {
      "heading": "Key empirical findings",
      "content": "- Growth shocks and government effectiveness\n  - A decline in growth of 2 percentage points increases the probability of entering fragility, with a substantially larger impact for countries in the middle-range of government effectiveness.\n  - The effect of a 2 percentage point growth decline on the probability of exit from fragility is less pronounced.\n  - Improving government effectiveness from a low level has a more uniform (less bell-shaped) impact across growth rates, helping prevent entry into fragility at a wide range of growth rates.\n- Social spending and exit success\n  - Countries that successfully exit fragility spend more on health and education than those that do not escape.\n  - These patterns suggest a possible virtuous cycle: protecting social spending → enhanced political and social inclusion → pressure to improve government effectiveness (fiscal, legal, civil service capacities) → stronger economic foundation.\n- Pivotal moments\n  - Countries that experience a pivotal moment (a critical juncture such as after a crisis or a change of leadership) are more likely to:\n    - Exit from fragility,\n    - Implement critical reforms to strengthen institutions and policy frameworks,\n    - Enjoy more economic resilience after exit.\n- Case examples\n  - Uganda: Improved political stability enabled reforms to strengthen economic institutions and policies, helping build resilience and increase social inclusion (some progress reversed after 2017).\n  - Rwanda: After regaining political stability in the early 2000s, reform efforts backed by international support helped improve resilience, governance and institutions, and social inclusion."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Counter-cyclical macroeconomic policy\n  - Near-fragile countries need to implement counter-cyclical policies—such as a fiscal stimulus—to prevent sharp contractions in economic output when growth weakens.\n  - External financing from international partners can support counter-cyclical policies.\n- Strengthen macroeconomic and governance frameworks\n  - Sound macroeconomic policies should be supported by strong governance and anti-corruption measures to ensure proper use of resources and maintain a stable economy.\n- Institutional and inclusion reforms\n  - Improve institutions and enhance political and social inclusion through measures such as:\n    - Fewer barriers to political participation,\n    - Expanded access to legal systems,\n    - Less corruption and discrimination in government agencies,\n    - Protection of social spending.\n- Seize pivotal moments\n  - Governments and international partners should recognize and support pivotal moments to implement critical reforms that can trigger durable exits from fragility."
    },
    {
      "heading": "Interpretations and mechanisms",
      "content": "- Vulnerability profile\n  - Countries in the middle-range of government effectiveness are particularly vulnerable to growth slowdowns, implying targeted policy attention is needed for this group.\n- Virtuous cycle hypothesis\n  - Protecting social spending can initiate a reinforcing process that strengthens inclusion, government effectiveness, and ultimately economic resilience.\n- Reform sequencing and support\n  - Institutional strengthening and social inclusion are mutually reinforcing and benefit from international support, especially during windows of opportunity.\n\nSource: IMF Blog post “How To Escape The Perils of Fragility,” August 3, 2021.\n\n---\n\n\n References\n\n- new IMF staff working paper\n\nSource: https://www.imf.org/en/blogs/articles/2021/08/03/how-to-escape-the-perils-of-fragility"
    }
  ],
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    "Authors: Olusegun Akanbi, Kenji Moriyama, Keyra Primus",
    "Published: August 3, 2021",
    "Authors: Olusegun Akanbi, Kenji Moriyama, Keyra Primus",
    "Publication date: August 3, 2021",
    "Subject: Fragile and conflict states—currently about 40 countries—facing cycles of low administrative capacity, political instability, conflict, and weak economic performance.",
    "Dataset analyzed: 196 countries between 1979 and 2018.",
    "Empirical tools referenced: staff working paper and two charts measuring changes in probabilities of entry into/exit from fragility.",
    "Growth shocks and government effectiveness",
    "Social spending and exit success",
    "Pivotal moments",
    "Case examples",
    "Counter-cyclical macroeconomic policy",
    "Strengthen macroeconomic and governance frameworks",
    "Institutional and inclusion reforms",
    "Seize pivotal moments",
    "Vulnerability profile",
    "Virtuous cycle hypothesis",
    "Reform sequencing and support",
    "[new IMF staff working paper](https://www.imf.org/en/Publications/WP/Issues/2021/05/06/Avoid-a-Fall-or-Fly-Again-Turning-Points-of-State-Fragility-50242)"
  ],
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