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Early Economic Recovery in Fragile States

Author: Hugo de Vries, Leontine Specker
Date: 2009
Size: 82 pages (372 KB)

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Summary

How can economic activities contribute to stability as part of an integrated reconstruction strategy in fragile states? This report from the Clingendael Institute examines: (1) emergency employment for high-risk and vulnerable groups; (2) income generating activities, private sector development and micro- finance for communities; and (3) creating an enabling national environment for growth. All three ‘tracks’ must be considered and worked on from the start, and this process should be led by the country itself as soon as possible. Where the international community needs to 'come in', and what activities to emphasise, will depend on the context.

Proponents of early economic recovery tend to aim either to catalyse long-term development or to contribute to short-term stability by providing high-risk groups with alternatives to violence. The latter may be seen as a precondition for the former, but ideally they should be integrated.

The three main 'tracks' of economic interventions require emphasis at different moments in the peacebuilding process. They should be considered simulataneously, however. Donors tend to neglect track three, but complementing ‘bottom-up’ economic work with ‘top-down’ capacity- and institution-building is crucial. The three tracks involve:

• Track 1: Emergency employment for high-risk and high-needs groups targeting specific conflict-affected individuals through short-term responses: tends to peak immediately after conflict and is particularly relevant to severely incapacitated countries (such as the DRC and Afghanistan) where local economic institutions are lacking
• Track 2: Income generating activities, private sector development and micro- finance for communities to consolidate stability gained: peaks somewhat later
• Track 3: Creating an enabling national environment by working on policies and institutions and setting the rules of the game for durable economic development: peaks last

There are two main challenges to project implementation: 1) priority-setting and political pressure; and 2) lack of capacity. Priority-setting requires a strategic plan for short- and long-term activities. A lack of strategic thinking and adequate conflict analyses leads to ‘development business as usual’ which may not be effective in fragile states. Lack of strategy also threatens sustainability and coordination among development (and humanitarian) actors. Fragmented donor engagement may play into the hands of politicians’ private interests in maintaining their patronage networks. In terms of capacity, interventions have often relied on international personnel, neglecting capacity development and thus undermining sustainability. The capacity of local ‘coalitions of the willing’, however, can be built quickly, with immediate impact.

It is important to start as early as possible with economic recovery to promote peacebuilding, preferably during the later phases of conflict. It is also crucial to work holistically; all three tracks should be worked on, but the intensity should differ according to the context. The more momentum the peacebuilding process creates, the more stability is created, allowing broad-based economic activities to be implemented. Further recommendations include the following:

• Track 1: Labour-based projects in agriculture or infrastructure can create short-term jobs, and can be combined with basic skills training and the provision of micro-credit to boost entrepreneurship. Broader communities should be involved as soon as possible.
• Track 2: Initiatives could focus on local ‘coalitions of the willing’ and include agriculture (for example, by enhancing consumption and improving markets) or infrastructure, private sector development and micro-finance. Letting specific groups within villages jointly apply for loans can increase social control over repayments.
• Track 3: While donors should buy capacity if security is at stake, they should otherwise build it. Fragile states will differ as to where building state capacity should begin, depending on the number and quality of institutions left standing. Donors should search for actors for change within state institutions, and open the discussion on merit-based appointments for bureaucrats as soon as possible.

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Source: de Vries H. and Specker, L., 2009, 'Early Economic Recovery in Fragile States: Priority Areas and Operational Challenges', Conflict Research Unit, Clingendael - Netherlands Institute of International Relations, The Hague
Organisation: Netherlands Institute of International Relations 'Clingendael', http://www.clingendael.nl