Fixing Failed States

February 23, 2008

     By Duncan Green     

Just finished the book of this title by Ashraf Ghani and Clare Lockhart. It left me with a mixture of excitement and frustration – excitement because it sets out some good ideas on state-building, frustration because it doesn’t quite live up to the title and is sloppily edited, with whole chunks repeated verbatim, wandering narrative etc (shame on you, OUP!).

But let’s focus on the interesting stuff. The authors have a go at a ‘kicking away the ladder’-style trawl of some historical examples of state-building, citing Singapore, the Southern US, European Union and Ireland. Not bad, especially when showing how Singapore went from fragile case and predicted basket case to statist development superstar. As always, there is a nobel prize-winning economist on hand (in this case Gunnar Myrdal) to pronounce that the country is doomed, just as it begins a stellar take-off.

But the real substance is drawn from Afghanistan, where the authors first met and worked together when Ghani was Finance Minister after the fall of the Taliban, and Lockhart was an adviser to the government. I previously blogged on their account of this in Prospect.

The authors identify and explain ten core functions of the modern state (the state’s remit – and spending- has expanded remorselessly over the last 200 years):

– Rule of Law
– A monopoly on the legitimate means of violence
– Administrative Control
– Sound management of public finances
– Investments in human capital
– Creation of Citizenship Rights through Social Policy (eg social protection),
– Provision of Infrastructure Services
– Formation of a market
– Management of public assets, both physical and intangible (eg national brand)
– Effective Public Borrowing

They also wrestle with the question that has come up repeatedly in presentations of ‘From Poverty to Power’: are effective states generally built by autocrats (think Bismarck or Stalin), rather than democrats? Their answer is that history has moved on, and that today’s state builders need to respect rights and consult their populations, both to achieve internal legitimacy, and international acceptance. They argue this more through assertion than evidence, though – it certainly doesn’t pass the China test.

Where it gets interesting is in discussing the implications of state-building for the international system. The authors argue for an overhaul to agree ‘international compacts’ around a ‘sovereignty strategy’ of conscious state building for each country, defined as ‘the alignment of internal and external stakeholders to the goals of a sovereign state.’ ‘Instead of the many different interventions – humanitarian projects, security, development, trade – agreeing on a long-term, state-building strategy tailored to specific contexts and designed to achieve a fully functioning state should be an organizing principle for the international community.’

All well and good, but what do such sovereignty strategies actually contain? Here it gets a bit vague. In a manner analogous to the ‘growth diagnostics’ work of Rodrik, Hausmann and co. at Harvard University, the authors argue that ‘the state-building agenda entails easing constraints on state institutions… Rather than adhering to a model that stipulates a priori both the institutions and the mechanisms for their creation, this approach encourages piecemeal, context-specific innovations.’  This ‘institutions diagnostics’ approach necessarily entails a lot of trial and error – a job for searchers, not planners, in William Easterly’s useful schema .

Although this approach needs a lot more specifics, there are a few tantalising illustrations from Afghanistan, for example when they wanted to replace a chaotic system of multiple currencies, the IMF warned it would take years, and UN advised that Afghanistan would need to employ 8,000 bureaucrats. In fact they did it in four months, by working with the national network of hawala money traders who rapidly organized the collection and then burned and replaced the old money.

Finally, the authors trumpet the virtues of the Afghan National Solidarity Program, set up in 2003 and ‘designed to empower communities to manage their own reconstruction process. The government provided block grants of between $20,000 and $60,000 to every village in the country as long as they agreed to abide by requirements that the village elect its leadership council by secret ballot, hold participatory meetings to design its own recovery plan and projects, and post its accounts in a public place… four years later, the programme has seen more than 12,000 village development councils elected ad more than 19,000 project plans approved.’

What interested me was the striking echo with the approach of the US marines to the challenge of chaos and complexity, which I’ve covered in a previous blog – no attempt to determine the exact course of an engagement, just stick to three basic principles: take the high ground, keep moving and stay in communications contact. So is the NSP the way to spend money and build states in a chaotic and complex world?


February 23, 2008
Duncan Green