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A new way to approach economic growth in fragile contexts

Weak legal systems, complex regulations, dishonoured agreements, corruption, general disorder - these are just some of the challenges that development agencies working in fragile and conflict-affected states face. What kind of interventions can encourage economic growth in this environment?

While international organizations can make a significant contribution to promoting structural change through their activities, they do not always have the right tools to know what will work. UNU-WIDER researchers wanted to provide development agencies with a systematic way to think through their activities in difficult contexts and design appropriate interventions. The result was Deals and development in fragile and conflict-affected states, a practical guidebook which utilises the deals and development framework in a new way to approach growth in fragile countries.

What is ‘deals and development’?

Economic growth is correlated with other measures of human development and provides the basis for meeting basic needs, aspirations as well as spending on public goods.

To ensure that this ambitious guidebook would be as useful and practical as possible, the design process involved working closely with advisors from the UK’s Foreign, Commonwealth & Development Office (FCDO). Practitioners currently working in Somalia, South Sudan and the Democratic Republic of the Congo provided inputs from their specific country contexts, which were incorporated in the guidebook. 

The deals and development framework is designed to analyse the political economy drivers of growth episodes. However, growth in fragile countries tends be erratic rather than stable, reflecting a ‘boom and bust’ cycle. This guidebook enhances the existing framework to incorporate the key symptoms and drivers of state fragility, as well as providing tools for applying the theory into fragile contexts. The ultimate aim of the guidebook is to help bring about positive and sustainable economic growth to improve the prospects for escaping fragility.

How does it work?

The guidebook provides an overall framework for analysing the relationship between political economy variables (business and political interests), state fragility, and economic growth. It helps to illustrate how different patterns of growth lead, through feedback loops, to adjustments in the political economy environment.

In addition, the guidebook offers tools for putting the theory into context, including key questions to guide the reader to work through the framework, with practical examples and suggestions for potential interventions, while identifying possible pitfalls.

The framework offers a superb way to visualize economic interests within a fragile context.

However, rather than being a ‘plug and play’ application, the guidebook is meant to guide deep, context-specific analysis by a multi-disciplinary team of advisors and to stimulate new framings of the challenges of growth in fragile states.

The FCDO has already applied the new approach with their World Bank colleagues in Somalia by encouraging more analysis on the private sector and the large firms that dominate the economy in the country. ‘The work has helped us in our thinking’, says Caroline Slaven, Economic Adviser in FCDO Somalia office, who was involved in the development of the guidebook. ‘The next step is to reach out to large players and use their interests to incentivise a move away from uncompetitive behaviour and diversify their investments’.

Download the guidebook from the UNU-WIDER website.

The views expressed in this piece are those of the author(s), and do not necessarily reflect the views of the Institute or the United Nations University, nor the programme/project donors.