Fragile States: Critical Questions

What states do, or do not do, matters for development and the wellbeing of their citizens. States have the responsibility to protect their citizens and to progressively promote their material and non-material welfare. Many states cannot or will not live up to this responsibility.

States like these have been labelled ‘fragile’ states, suggesting that the essence of statehood, such as the provision of leadership, public services and infrastructure, safety and security and justice are close to breaking point.

Kate Holt / IRIN: Zimbabwe IDPsWhen it breaks, states fail. For instance, at the time of writing ‘Children have been killed by beating, sniper fire and shelling from Government’ in Syria; while in Zimbabwe, Mugabe’s government (whose Gukurahundi massacres of the 1980s have been classified as genocide by Genocide Watch) has been preying on its own citizens while concluding a ‘defence’ co-operation agreement with Iran.

There are unfortunately many more fragile and failed states than Syria and Zimbabwe. The OECD identifies 45 fragile states. These include Afghanistan, Ethiopia, Pakistan and Iraq – countries that like Syria and Zimbabwe are characterized by conflict, civil strife, poverty, and hunger. These are four countries receiving the most foreign aid in the world – almost US$ 18 billion in 2010.

The OECD list also includes small island states such as the Solomon Islands and Kiribati – who receive little aid, have not fortunately seen much mass conflict, but nevertheless struggle to protect their citizens from external threats.

The government of Kiribati is reportedly considering purchasing 20 square kilometers of land on the nearby island of Fiji (another fragile state where a military government is in charge) to relocate its 113,000 citizens in light of climate-induced sea-level rise.

In another fragile small island state, Haiti, only 5 per cent of the rubble from the January 2010 earthquake that killed more than 200,000 people has been cleared after one year; more than a million people are still homeless, and thousands have died from cholera.

A positive trend in the development discourse over the past decade has been the recognition that state fragility and state failure is at the heart of many global development dilemmas – including conflict, poverty, terrorism, crime, food insecurity, adaptation to climate change and vulnerability in the face of natural hazards.

The scholarly debate on fragile states has similarly progressed – at the beginning of the 2000s the term was hardly known outside security circles – today many hundreds of documents are available. Many donors are now prioritizing fragile states – for instance the Dutch government reduced its development partnership countries from over 30 to 15, the latter consisting almost exclusively of fragile states – and increasing efforts to harmonize aid to these states.

Furthermore, in November 2011 a group of 19 fragile states (the g7+) and partner countries announced a ‘new deal’ to further state-building and peace-building. In light of the challenges that fragile states pose for global development the United Nations University (UNU-WIDER) launched in 2006 a project on Fragility and Development that I co-directed.

Naude / Fragile States

This project has resulted in a number of scholarly outputs – the most recent a book I co-edited with Amelia Santos-Paulino and Mark McGillivray entitled ‘Fragile States: Causes Costs and Responses’ (published by Oxford University Press, Aug. 2011).  The book was formally launched at a function at the University of Oxford on 19 March 2012.

In my presentation (watch it here), I summarized the essence of the book: (i) the identification – and prediction – of fragile states are important (for instance the OECD did not include Egypt or Syria in its 2011 list of fragile states); (ii) state fragility is a cause but also a consequence of conflict, and it is characterized by a loss of authority, legitimacy and/or capacity of a state; (iii) fragile states cast significant external costs on their neighbours and the rest of the world, often to the extent that outside intervention is required – not only in ending conflict but also in making peace agreements stick; (iv) in addition to direct international intervention, aid is required in fragile states and can make a difference – but the right aid modalities are important, and more is needed to be learned and done in terms of private sector development in fragile states.

Yet despite the forward step granting fragile states their due attention, one may ask whether or not two steps have been taken backward over the same period – especially since the 2008 global financial crisis? Consider for instance that the share of people living in extreme poverty in fragile states doubled from 20 to 40 per cent between 2005 and 2010.

The number of fragile states has not noticeably shrunk – there were UN peacekeepers in the DRC in the 1960s, they are still there. The World Bank asks in its 2011 World Development Report ‘How is it that almost a decade after renewed international engagement with Afghanistan the prospects of peace seem distant?’ Despite economic growth between 2001 and 2008, and a commodity boom that saw historically high growth rates in Africa and other developing countries, many states remain fragile – even some middle income states.

The global financial crisis, the recession in the USA and some European countries, and the ‘Arab Spring’ has turned the attention away from Sub-Saharan Africa, the location of most fragile states. There, crises in Sudan, Somalia, Zimbabwe, Swaziland, Kenya, Senegal, Central African Republic, Madagascar and most recently Mali, have flared up. The practical failure to make progress against fragile states, particularly in Sub-Saharan Africa, may be seen as a step backward.Aubrey Graham / IRIN: IDP camp in DRC

Another setback is the position adopted recently by some BRIC countries – particularly Russia and China – complicating adherence to the UN’s responsibility to protect (R2P) principle. For example these countries vetoed a UN Security Resolution against Syria on 4 February 2012.

China remains one of the staunchest supporters of the Mugabe regime, supplying it with weapons (including a recent shipment of 21,000 handcuffs) and cash; and Russia remains one of the world’s major arms exporters. If the international community is to make progress in overcoming state fragility in the near future, getting the all the BRICS on board, and dealing with their own fragilities, much of which stems from economic challenges, may be essential.

In an earlier blog I wrote that ‘while the international community may be slow to assist the people of Syria due to the obstructive behaviour of China and Russia, international intervention was important in 2011 to protect civilians in fragile states including the Democratic Republic of Congo, Libya, Somalia,  Sudan and Côte d’Ivoire’.

At the Oxford book launch of ‘Fragile States’, Paul Collier discussed the lessons from the international interventions in 2011 in Côte d’Ivoire and Libya. One lesson is that a combination of financial pressure and moderate military resistance can topple a regime, even one with a strong army, quite quickly. Economics can unlock a political mess.

In the case of Côte d’Ivoire’s Laurent Gbagbo, refusing to accept defeat in his country’s 2010 presidential elections, a financial embargo meant for his army that they may not get paid. As Paul Collier pointed out, Gbagbo’s opponent Alassane Ouattara is after all an economist, and as a former deputy head of the IMF was very aware of how constricting financial sanctions could be. He was right – the Gbagbo army consequently refused to put up strong resistance; in April 2011 Gbagbo was captured. He now faces four charges of crimes against humanity in the International Criminal Court in The Hague.

A broadly similar pattern repeated itself in Libya. In both cases the fact that the UN Security Council was not blocked by China or Russia or any other nation (the Security Council was quick to recognize Ouattara as winner of the presidential elections in December 2010) may have been important.

Will the pattern repeat itself in the case of Syria or in other countries where dictatorial regimes fail in their responsibility to protect? Can financial and military pressures be effectively applied without support or consent from China and Russia? And can economic conditions be created in China and Russia, both elite-dominated societies, so that the R2P principle is perhaps not seen as a threat to them?

Along with the need to create jobs and develop the private sector in fragile states, these are among the critical questions facing the international community.

Wim Naudé, Professorial Fellow at UNU-MERIT and the Maastricht Graduate School of Governance

Six Key Themes for Eco-innovation

Speak of eco-innovation and people immediately think of electric cars and solar power. But the shift to a post-carbon economy depends on much more than technological improvements. It requires a sea change on many levels, from individual lifestyles to commercial investment to international governance.

As of 2012 almost all nations have created policies to stimulate innovation. These are based on two theoretical rationales: a market failure rationale that says that because of the danger of imitation companies will underinvest in innovation, and a system failure rationale that says that the source of underinvestment may lie outside the company (lack of venture capital, barriers to entry).

The latter perspective sees innovation activities as part of a system of knowledge generation, diffusion and use. Here national innovation capacity is shaped by education and training systems, the macroeconomic and regulatory context.

Both perspectives provide general rationales to stimulate innovation but the policies are often mistaken or unnecessary. In many cases they create windfall profits for recipients, providing push when pull is needed and, by being technology-blind (but not neutral), favour incumbents instead of challengers.

We face a double bind. Those who argue for policy coordination usually don’t say much about how this is to be done; while those who favour generic policies turn a blind eye to the need for specific policy to deal with specific barriers (in market entry, regulation, costs).

I wanted to write about this because discussions about eco-innovation are in many cases highly superficial or unnecessarily abstract. This blog is based on a longer article for S.A.P.I.E.NS, where I presented 10 key themes for eco-innovation. Of these I will now focus on six.

Theme 1: Eco-innovation policies should be based on identified barriers
To be effective and not wasteful, innovation policy should be based on identified barriers to particular types of eco-innovation instead of on abstract notions of market failure and system failure. Here are some examples from a 2011 Eurobarometer survey (click to enlarge):

Theme 2: Preventing windfall profits
A drawback of financial support policies is that projects receiving support would also be undertaken in the absence of support. An evaluation in 2002 of the Dutch WBSO fiscal scheme consisting of a subsidy on researcher costs revealed that in 72 per cent of the cases where companies with more than 200 employees use the WBSO, the scheme had no impact on the carrying out of a project. For 4 per cent only it was a deciding factor. For smaller companies the results are more favourable but still not very positive. For all class categories the deciding impact was below 25 per cent.

Theme 3: Specific versus general support
Specific support for R&D has a bad name amongst economists, much more than the generic fiscal support policies, for the reason that ‘government cannot pick winners’. Whilst there is an element of truth in this contention, we have just seen that blind innovation support can be wasteful too. Specific technologies such as algae-based fuels and organic solar cells suffer from specific barriers that no general support scheme can successfully address, which is why we need specific policies. Specific support for specific technologies is not about picking winners but about dealing with specific barriers.

Theme 4: Balance of policy measures and timing
While R&D policy can help facilitate the creation of new environmentally friendly technologies, it provides little incentive to adopt these technologies. Adoption, so important for post-innovation improvements, calls for demand-side measures. Pull policies do not make push policies unnecessary. The need for a balance between supply and demand measures is illustrated by the experiences with the EU emissions trading system (ETS) for carbon emissions. The ETS is the cornerstone of European climate policy, covering 10,800 industrial installations across Europe in four energy-intensive sectors. The total value of carbon trade amounted to 100.5 billion USD in 2008 and 118.5 billion USD in 2009. It was introduced in part because it was believed to stimulate innovation in low-carbon technologies but largely failed to have this effect according to evaluations.

Theme 6: Missions for system innovation
Among innovation experts there is a discussion of whether persistent problems such as global warming warrant mission-oriented programmes. Superficially, the attention to missions seems like a return to the emphasis in the 1950s and 1960s on public goals to guide science and technology development.  There is however a big difference between the old missions about space and military technology and the new mission for environmentally sustainable development: the older projects developed radically new technologies through government procurement projects that were largely isolated from the economy.

Mission-oriented projects for sustainable development require the adoption of new technologies and practices across a wide range of sectors as well as changes in consumer demand and behaviour. This brings many actors into the process and will require a range of policies and customized solutions to deal with the many barriers. Innovation missions require policy coordination across sectors and levels of government. Much of the current attention is on high tech options such as advanced batteries for cars. But CO2 reductions can also be achieved through policies to reduce car-based mobility, through improved public transport, organized car sharing and intermodal systems of transport with an important role for bicycles. Innovation policy should be more concerned with system changes than it currently is. Instead of being concerned with technologies, policies should be concerned with innovation, especially innovations that require a long period of development and long-term investment, which require the involvement of many actors for their development, creating problems of coordination of interdependent activities and problems of appropriating the benefits.

Theme 8: Innovation portfolio
For sustainable development and green growth it is advisable that government support be given to a broad portfolio of options: to widen the search process, which often is unduly narrow. There should also be a good mix between low-risk and high-risk projects. By relying on adaptive portfolios, two possible mistakes of sustainable energy policy may be prevented: 1) the promotion of short-term options resulting from the use of technology-blind generic support policies such as carbon taxes or cap and trade systems (which despite being ‘technology-blind’ are not technology neutral at all because they favour low-hanging fruit and regime-preserving change, and 2) picking losers (technologies and system configurations which are suboptimal) through technologyspecific policies.

The case for eco-innovation policy is particularly strong: first because the benefits are undervalued in the market place, and second because power supply and transport are ‘locked in’ to old technologies.

Markets rarely help eco-innovation because prices do not reflect environmental costs; and this is especially the case for green energy, hampered by the low cost of fossil fuels, long development ‘lead’ times, and grid connection issues. I therefore recommend specific support policies for green innovation beyond existing technological paradigms.

However different types of eco-innovation require different policies. Incremental improvements of commercial products rarely need special support, as firms are normally able to produce and fund these. By contrast radical and system innovations need much more support, especially radical transformative innovations. So I advocate strong support for transformative innovation, embracing not only financial but also institutional change in the economic and social world.

Regarding climate change and energy security, EU policy makers have broadly welcomed the concept of ‘mission’ policies (without specifically using the word mission). There is indeed a need for mission policies but the goal of such policies should not be about developing technologies but much more about ensuring the adoption of innovations. To avoid lock-in, these missions should be based on a portfolio of technologies backed up by adaptive policy making, evolving with experience and critical self-evaluation.

To design and roll out effective policies, government officials need to fully understand eco-innovation barriers and innovation dynamics. Blind technology support, favoured by economists, generates little more than windfall profits and rarely sparks radical change. Meanwhile the case for fiscal policies seems weaker than the case for specific focused innovation policies.

In my opinion, much more support should be given to transformative innovation. The above mentioned themes — which are clearly interlinked — help focus attention on relevant policy issues. Effective policy depends on effective governance, both of which depend on policy learning and building long-term strategic perspectives.

René Kemp, Professorial Fellow, UNU-MERIT and ICIS