Chapter 5 - State-building in fragile contexts

State functions and legitimacy

State functions

Whilst there is consensus that a resilient state must be able to deliver certain functions which meet citizens’ needs and expectations, there is a great deal of debate about what these functions should be, and whether it is possible to establish a hierarchy between them. DFID and other donors distinguish between state ‘survival’ functions and ‘expected’ functions which are essential to meet public expectations and ensure state legitimacy. DFID does not propose a hierarchy between these, as action in both areas is required to generate a positive state-building dynamic.  The literature offers various combinations of ‘core’ functions, the more common of which are: a monopoly over the legitimate use of force; revenue generation; safety, security and justice; basic service delivery; and economic governance.

Relatively little evidence-based work has been done to substantiate the arguments about which core functions states should perform or prioritise. Importantly, expected functions will differ according to the historical and cultural factors that shape state-society relations in different contexts. Many view the discussion as essentially political, since it questions the proper role and size of the state vis-à-vis other authorities and groups in society.

Ghani A., Lockhart C., 2005, 'Closing the Sovereignty Gap: An Approach to State Building', Overseas Development Institute (ODI), London
Where a state consistently fails to meet the basic prerequisites of a sovereign government, how can this ‘sovereignty gap’ be closed in order to improve its security and prosperity? This paper argues greater emphasis should be placed on core functions that a sovereign state must perform. When they are performed well, the state creates a virtuous circle generating greater legitimacy and trust between the governing and the governed. The failure to perform one or a number of the functions well creates, by contrast, a vicious circle, leading in the end to varying degrees of state failure.
Access full text: available online 

The Ghani/Lockhart framework of state functions is available on the website of the Institute for State Effectiveness.

Political settlements

The nature and evolution of the ‘political settlement’ is increasingly viewed as a key underlying determinant of state fragility or resilience. A political settlement can be understood as: ‘the forging of a common understanding, usually among elites, that their interests or beliefs are served by a particular way of organising political power’ (Whaites, 2008). These often unarticulated, negotiated agreements usually extend beyond elites to bind together state and society, provide legitimacy for rulers, and can prevent violent conflict from occurring. Recent research has emphasised that the inclusiveness of the political settlement affects the potential for political stability.

Donors typically support political settlements through formal power-sharing mechanisms, elections, parliamentary strengthening, and constitution-building processes. But many stress that although political settlements may adopt the structures of the ‘modern’ state and be underpinned by a constitution, in practice the power relations behind the settlement may be very different.

Whaites A., 2008, 'States in Development: Understanding State-building', Department for International Development, London
Why do some states manage state-building better than others? How can development actors support positive state-building? This paper locates the political settlement within a proposed state-building model. It argues that improved understanding of state-building can increase the impact of aid, while lack of understanding reduces its benefits. Two conceptual frameworks, or models, for statebuilding dynamics are evident: The first is a model of how state-building can work to produce capable, accountable and responsive states – namely responsive statebuilding. The second is a model of unresponsive state-building – a set of dynamics likely to lead to states affected by problems such as endemic rent-seeking or political repression.  The extent to which the political settlement is inclusive or exclusionary is a critical factor in determining whether state-building is responsive or unresponsive.
Access full text: available online

Lindemann, S, 2008, ‘Do Inclusive Elite Bargains Matter? A Research Framework for Understanding the Causes of Civil War in Sub-Saharan Africa’, Crisis States Research Centre, London School of Economics (LSE), London
Sub-Saharan Africa is the world’s most conflict-intensive region. But why have some African states experienced civil war, while others have managed to maintain political stability? This paper argues that the ability of post-colonial states in Sub-Saharan Africa to maintain political stability depends on the ability of the ruling political parties to overcome the historical legacy of social fragmentation. Inclusive elite bargains’ involve a ruling party that integrates a broad coalition of key elites by defining inclusive access to state structures (jobs) and state resources (rents). ‘Exclusionary elite bargains’ involve a narrow coalition of elites who define exclusionary access to state structures (jobs) and state resources (rents). ‘Inclusive elite bargains’ permit the maintenance of political stability, whereas ‘exclusionary elite bargains’ give rise to trajectories of civil war.
Access full text: available online

International IDEA, 2011, 'Constitution Building After Conflict: External Support to a Sovereign Process', Policy Paper, International Institute for Democracy and Electoral Assistance, Stockholm
This paper examines the challenges and nuances of external support to constitution building, which can, it argues, be both constructive and problematic. It calls for a restrained approach to such support, based on 'invitation points' rather than 'entry points'. The quality of the process used is crucial to successful constitutional design, and the choice of process needs to be left to national actors.
Access full text: available online

Sisk, T., 2008, ‘Pathways of the Political: Electoral Processes after Civil War’, Discussion draft for Research Partnership on Postwar State-Building, Chapter 9 in (eds.) R. Paris and T.Sisk, The Dilemmas of State-building: Confronting the Contradictions of Postwar Peace Operations, Routledge
How do election processes contribute to stability after civil war? This research compares state-building in Cambodia, South Africa, Afghanistan and Liberia. It argues that electoral processes are necessary in moving beyond violence. However, the way elections are carried out is critical. Sequencing, design and the extent of international oversight are the key variables that determine the extent to which electoral processes contribute to capable, responsive states or to captured, fragmented and weak states.
Access full text: available online 

Mehler, A., 2008, ‘Not Always in the People’s Interest: Power-sharing Arrangements in African Peace Agreements’, GIGA German Institute of Global and Area Studies, Hamburg
Peace agreements that place a heavy emphasis on power-sharing often preclude the people’s interests and can impede sustainable peace. This paper analyses the impact of power-sharing arrangements in recent African peace agreements. Many peace agreement failures are caused in part by the international community’s support of power-sharing that benefits armed rebel movements to the detriment of long-term conflict solutions.
Access full text: available online

Barnes, C., 2009, ‘Renegotiating the Political Settlement in War-to-Peace Transitions’, Conciliation Resources, London
What are the impacts of political settlements on creating peace? What is the best way to support peace processes to produce inclusive and robust political settlements? This paper explores issues around the renegotiation of the political settlement within war-to-peace transitions. During such transitions there are opportunities to shift the terms of the political settlement. To engage with these challenges in ways that benefit the poor and marginalised, greater understanding is needed of the political processes involved and of links with conflict.
Access full text: available online

Parks, T. and Cole, W., 2010, 'Political Settlements: Implications for International Development Policy and Practice', Occasional Paper, no. 2, The Asia Foundation, San Francisco
This paper presents a 'political settlements framework' that involves consideration of political settlements in conflict-affected and fragile areas; of how settlements are maintained; of how they change; of their historical evolution; and of settlements at subnational levels. It suggests that development organisations need to use such analysis to adapt their strategies. These should promote the best-case scenario in the short term, while investing in long-term programmes that will promote inclusiveness, development, and stability. Practical approaches to influencing political settlements are also outlined.
Access full text: available online

Elhawary, S., Foresti, M. and Pantuliano, S., 2010, ‘Development, Security and Transitions in Fragile States’, Meeting Series Report, Overseas Development Institute, London
What has been learned since 'fragile states' became the central focus of many development actors? This report synthesises findings from a meeting series on Development, Security and Transitions in Fragile States. While understanding of how to work in fragile states has greatly improved, actually changing ways of working and succeeding in practice remains a challenge. The international community needs to be much more realistic about what it can achieve and to recognise that transition processes require long timeframes and depend largely on domestic processes and actors.
Access full text: available online

Security and justice

Justice, security, and the rule of law are core functions of the state, and essential prerequisites for enabling economic and social development. The state is responsible for protecting its citizens from violence, for ensuring suitable mechanisms of redress, and for the protection of rights. Fragile situations are often characterised by an acute lack of security and justice and, in many cases, the state itself is the primary perpetrator of violence and insecurity.

Security and justice matter to the poor and other vulnerable groups, especially women and children, because bad policing, impunity, and corrupt militaries mean that they suffer disproportionately from crime, insecurity, inter-personal violence and fear. Restoring or building a minimum level of security is therefore a priority for international support to fragile situations.

Scheye, E., and McLean, A., 2006, 'Enhancing the Delivery of Justice and Security in Fragile States', OECD-DAC Network on Conflict, Peace and Development Co-operation (CPDC), Paris
How should international actors contribute to the support of justice and security in fragile states? This paper analyses the providers, processes and objectives of fragile states’ justice and security services, and reviews lessons learnt by donors in this area. It argues that international actors should take a multi-layered, context-specific approach to fragile states, developing the capacity of the state, but also enabling it to engage with non-state justice and security providers.
Access full text: available online

OECD DAC, 2009, 'Armed Violence Reduction: Enabling Development', Organisation for Economic Cooperation and Development - Development Assistance Committee (OECD-DAC), Paris
Integrated, comprehensive and inclusive armed violence reduction (AVR) programmes are an emerging and growing area of development practice around the world. This paper discusses the components of a multi-level AVR approach. Adopting integrated AVR programmes requires understanding the multi-faceted, multi-level nature of armed violence, application of rigorous diagnostics of local situations and incorporation of local ownership at all levels of programme design and implementation.
Access full text: available online

Further resources on international peace and security architecture and rule of law in conflict-affected and fragile states can be found in the GSDRC’s conflict and justice guides.

Economic recovery and employment-centred growth

Economic recovery

There is broad consensus that creating economic opportunities for citizens is a critical state function, and many argue that economic recovery is a vital, although often under-emphasised, aspect of state-building in fragile states. The OECD (2010) argue basic growth in productive activities – for example, credit programmes, infrastructure, and extension services – are a necessary condition for developing a tax base and therefore central to state-building processes, but that overall these sectors have not figured prominently in donor policies. Much of the literature acknowledges that the predominant form of economic activity, and employment, in fragile states is likely to be informal (operating outside of formal rules).

Many fragile states have significant internal and external imbalances – large fiscal deficit, trade deficits and debt arrears. Addressing these macroeconomic imbalances is often a first priority in economic recovery strategies. But a key challenge for donors is how to move from short-term projects, which often raise expectations and disappoint later, to more sustainable, long-term and state-lead economic recovery. Recent research suggests that a balanced strategy which combines emergency employment, income generating activities (including private sector development), and the creation of an enabling environment through legal and regulatory reforms, is necessary to support more durable forms economic growth.

De Vries, H., and Specker, L., 2009, ‘Early Economic Recovery in Fragile States’, Clingendael Conflict Research Unit, The Hague
How can economic activities contribute to stability as part of an integrated reconstruction strategy in fragile states? This report 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 country context.
Access full text: available online

UNDP, 2008, 'Strengthening the Indigenous Drivers of Post-Conflict Economic Recovery’, Chapter 3 in Post-Conflict Economic Recovery: Enabling Local Ingenuity, Bureau for Crisis Prevention and Recovery (BCPR), UNDP, New York, pp. 48-105
How can the international community best support economic recovery after conflict? This chapter examines a community-based approach to stimulating economic activities in countries emerging from conflict. It contends that economic recovery is quicker and more sustainable when it is built on 'indigenous drivers'; local actors have the strongest long-term incentive to engage in activities conducive to sustained economic recovery. The indigenous drivers approach allows people and communities, as well as national institutions, to establish the priorities for post-conflict recovery and for reforming institutions.
Access full text: available online

GSDRC, 2010, 'Economic Growth and State-building', Helpdesk Research Report, GSDRC, Birmingham
There is very limited literature that explicitly discusses linkages between economic growth and employment generation and state- and peace-building. However, some of the key points that emerge from this literature are: Neoliberal policies for promoting economic growth have the potential to undermine state legitimacy; A key difficulty with the statebuilding process is limited state resources; The lack of attention to the direct promotion of employment in economic policies in fragile and conflict-affected societies has resulted in persistent high unemployment rates; Attention to spatial and regional inequalities is also important in growth strategies and in peacebuilding.
Access full text: available online

Further resources on the role of private sector development in supporting economic recovery in post-conflict and fragile states can be found in the GSDRC’s conflict topic guide.

Employment-centered growth

International interventions in post-conflict and fragile states have been criticized for failing to direct sufficient attention and funding to livelihood and employment generation. It is often assumed that long-term growth through macroeconomic stabilisation can be relied upon for job creation. Instead, many argue long-term employment generation will likely rely heavily upon private sector development.

GSDRC, 2009, 'Long-Term Job Creation in Fragile States', Helpdesk Research Report, GSDRC, Birmingham
Most resources on job creation focus on short-term job creation and income-generation in conflict-affected contexts. There is, however, some discussion on how to link short-term job creation efforts with longer-term action that lays the foundation for sustainable jobs and development (e.g. by incorporating private sector development and skills training). The following are the most commonly cited elements integral to sustainable job creation; an enabling framework for economic growth and sustainable job creation a consultative process; market development and value chain analysis; a private sector development strategy; skills training and labour market analysis; public sector involvement.
Access full text: available online

Further resources on the role of livelihoods and employment in supporting post-conflict economic recovery can be found in the GSDRC’s conflict topic guide.

Tax and state building

Many argue that taxation is a critical aspect of state-building. The ability to raise revenue and manage public expenditure are core state functions which underpin the formation of the social contract. Revenue raised through taxation, rather than through aid, arguably better supports state accountability to its citizens and, in turn, state legitimacy. Taxation and public expenditure are also important redistributive mechanisms which can allow the state to correct horizontal and vertical inequalities over time. Nevertheless, some argue that donors have paid insufficient attention to supporting taxation in fragile states, partly because reforming tax administration is a highly complex and ultimately political undertaking.

Everest-Phillips, M., 2010, 'State-Building Taxation for Developing Countries: Principles for Reform', Development Policy Review, vol. 28, no. 1, pp.75-96
This article provides practical implications for adopting a state-building approach to tax reform. It identifies seven operating principles (political inclusion; accountability and transparency; perceived fairness; effectiveness; political commitment to shared prosperity; legitimisation of social norms and economic interests; and effective revenue-raising) as the essential characteristics for state-building taxation, and offers recommendations on potential reforms to implement them.
Access full text: available online

Pritchard, W., 2010, 'Taxation and State Building: Towards a Governance Focused Tax Reform Agenda', Working Paper 341, Institute of Development Studies, Brighton
Taxation is fundamental to sustainable development, as it supports the basic functions of an effective state and sets the context for economic growth. This paper argues increased revenue generation cannot guarantee improved development outcomes unless it is accompanied by simultaneous efforts to enhance state capacity and build public engagement and accountability. The paper proposes measures broadly aimed at building a national dialogue about taxation and supporting the building of more integrated administrative structures.
Access full text: available online

Fjeldstad, O-H., and Moore, M., 2007, ‘Taxation and State Building: Poor Countries in a Globalised World’, CMI, Bergen
How far has the recent global wave of tax reform contributed to state-building in poorer countries? The conclusion of this paper mirrors other general globalisation arguments: there are good things to report, but worrying problems in the poorest and most dependent countries. The reform agenda is least appropriate to those countries most in need of the state-building to which the taxation process has contributed in other places and times. Governments in poorer countries have little choice but to go along with a reform agenda reflecting the priorities and needs of the more powerful actors in the international system. The contemporary tax reform agenda does not address the more urgent problems that the poorest countries face.
Access full text: available online

Moore, M., 2004, ‘Revenues, State Formation and the Quality of Governance in Developing Countries’, International Political Science Review, vol. 25, no. 3.
Sources of state revenue have a major impact on patterns of state formation. This article investigates how far the quality of governance in developing countries might improve if states were more dependent for their financial resources on domestic taxpayers. It argues that we can best understand patterns of state formation in the South by exploring the different context in which they were formed in comparison with that of earlier western European states.
Access full text: available online

The literature indicates rebuilding and supporting state capacity is critical but not sufficient. Institution building needs to be closely linked with reforms of both revenue and expenditure polices. Ultimately state revenues should be able to sustain state expenditure policies without donor support. The challenge, however, is that the tax base in fragile environments is often too small (or overly reliant on natural resources) to sustain these expenditure demands. Research suggests careful thought needs to be given to how, ultimately, different aspects of a state’s tax and expenditure polices will be drawn together. Research also suggests that donors will benefit from adopting a political economy approach to taxation in fragile states rather than a purely administrative approach.  Tax reform policies need to be based on thorough political analysis and assessment of the political sustainability of reforms.

Gupta, S., 2005, ‘Rebuilding Fiscal Institutions in Post Conflict Countries’, Occasional Paper 247, International Monetary Fund, Washington
Access full text: available online

Di John, J., 2010, ‘Taxation, Resource Mobilisation and State Performance’, Crisis States Working Paper Series No. 2, Working Paper No. 84, Crisis States Research Centre, London
How do patterns of taxation affect state capacity and production? What is the relationship between elite bargains and taxation patterns? How do aid flows and multilateral donor reforms affect statebuilding? This paper examines the political economy of taxation in a range of countries. It argues that the process of tax collection is a powerful lens through which to assess power distribution and the legitimacy of the state and of powerful interest groups in civil society.
Access full text: available online

 
State legitimacy

Fragile states often experience crises of legitimacy in the sense that citizens may not accept the state’s basic right to rule. State legitimacy and the development of trust between state and society have long been considered a critical dimension of state-building processes in the political science literature. But many argue that state legitimacy has often been poorly understood or overlooked by external actors aiming to support these processes.

The OECD-DAC identifies an opportunity for state-building to create a ‘virtuous cycle of legitimacy’ in the sense that: i) legitimacy is necessary for the process of state-building because the ability of the state to manage state-society expectations depends on its legitimacy in the eyes of its population, and ii) state-building and the delivery of certain functions which benefit people strengthens citizen confidence and trust in the state and in turn reinforces its legitimacy. But many argue there are tremendous limits on the capacity of external actors to influence state legitimacy, and very little empirical evidence of how donors can support state legitimisation. 

The literature denotes various types of legitimacy (including grounded, embedded, charismatic, international, self-legitimacy, performance) and sources of legitimacy (including performance against certain functions, representation, accountability, citizenship, rights). Understanding what state legitimacy means in different contexts is a critical concern for external actors. Some argue a state-building process is most likely to generate legitimacy for the state when it is inclusive of all major political forces and open to the participation of the public.

NORAD, 2009, ‘The Legitimacy of the State in Fragile Situations’, NORAD and French Ministry of Foreign Affairs
What is the nature of state legitimacy in fragile situations? How can legitimacy be fostered in such situations? This report suggests that legitimacy concerns the very basis for how state and society are linked and by which the state’s authority is justified. Interventions in fragile situations must therefore focus on relations between state and society and must be adapted to context. Neither the same type of legitimacy nor the same type of (end-) state can be established everywhere.
Access full text: available online

Kaplan, S., 2008 ‘Fragile States, Fractured Societies', chapter 3 in Fixing Fragile States: A New Paradigm for Development, Praeger Security International, London
What has caused the difficulties experienced by fragile states? This chapter explores the roots of state fragility and the role of foreign aid in sustaining past dysfunction. Two structural problems – political identity fragmentation (often based on arbitrarily drawn state borders) and weak national institutions – reinforce each other. They undermine state legitimacy, interpersonal trust and the formation of robust governance systems and encourage neopatrimonialism. Fragile states’ formal institutions need to be reconnected with the local societies upon which they have been imposed. The key to fixing states is to legitimise the state by deeply enmeshing it within society. 
Access full text via document delivery. Please see document summary 

Papagianni, K., 2008, ‘Participation and State Legitimation’, Chapter 3 in (eds.) C T Call and V Wyeth, Building States to Build Peace, Lynne Reinner, Colorado
How do postwar countries gain legitimacy in the eyes of political elites and the public? This study argues that state-building should be approached as a process (not an event) to legitimate new state institutions. It should also be seen as a process that meets the criteria of inclusion and participation. Although inclusive and participatory political processes do not necessarily lead to legitimate outcomes, when managed well, they have a significant chance of bolstering the legitimacy of postwar states.
Access full text: available online

Lake, D., 2007, ‘Building Legitimate States After Civil Wars: Order, Authority, and Institutions’, Unpublished Paper
How can statebuilding be improved? This paper from the University of California argues that successful statebuilding may be possible if the international community adopts a new framework. It presents a relational concept, using Somalia and Somaliland as case studies, and identifies alternative ways to rebuild state legitimacy.
Access full text: available online 

An important emerging issue concerns how poorly designed donor interventions can undermine state legitimacy and exacerbate rather than mitigate the conditions for violent conflict. Particularly in reference to Afghanistan, some have argued that intervening from the outside to build a state carries with it the risk of undermining the legitimacy and sovereignty of the very state donors are trying to secure and build. Specifically, donor interference in the management of budgets and resources is likely to undermine legitimacy rather than build state capacity (see Ghani and Lockhart,2005 above). Donors should ensure that interventions are based on a sophisticated understanding of the political economy and processes of legitimation in countries where they are operating.

OECD, 2010, ‘Do No Harm: International Support For Statebuilding’, OECD, Paris
How can donor interventions hinder or assist statebuilding processes? This report from the OECD's Development Assistance Committee draws on country case-studies to examine five key areas of statebuilding. Donors operating in fragile states need to analyse where their own countries’ strategic objectives contradict statebuilding objectives and where statebuilding objectives are themselves at odds. Donors can assist statebuilding by promoting: (1) inclusive political processes; (2) state legitimacy; (3) constructive state-society relations; (4) social expectations that are realistic but push states to do more; and (5) the development of sustainable capacities to carry out state functions.
Access full text: available online

ID21, 2007, 'Retaining Legitimacy in Fragile States', ID21 Insights, Volume 66, Institute of Development Studies, Brighton
Access full text: available online

New additions