Promoting inclusive, resilient, and sustainable development in fragile and conflict-affected states is needed to improve living standards, promote good governance and strengthen institutions.
More than two years into the pandemic, much of the world is seeing nascent recovery. However, prospects are dimmer for economies in fragile and conflict-affected situations, which are trapped in cycles of instability and crises. Strengthening the economic performance and financial strength of these countries can help them pursue pathways into resilience.
Strong economic growth can help countries avoid or break out of fragile situations. A new report by the Asian Development Bank’s Independent Evaluation Department finds that higher growth increases the probability of countries exiting fragility. A one unit increase in gross domestic product (GDP) raises by about 1.4–2.7 times the probability that a country breaks out of fragility.
Promoting sustainable and equitable growth in these countries is particularly difficult as fragility and conflict risks interact with and are aggravated by external shocks such as inflationary pressure caused by food, energy, or commodity price hikes, and pandemic or conflict-induced disruptions in trade and financial markets. Nevertheless, the pace and pattern of growth matter, as it increases the ability to deliver public services and improve living standards.
Investments to spur recovery in fragile states are restricted by limited budget and increasing debt. Slower growth and lower fiscal capacity exacerbated by the pandemic threaten the adequacy of social expenditures, such as health, education and social protection, that are particularly important for strengthening the resilience of economies in fragile contexts. Our research found that higher social expenditures raise the probability of a country exiting fragility. A one percentage point increase in social expenditures as a share of GDP leads to an increase in the likelihood by 1.1–1.25 times that a country escapes fragility.
In every crisis or conflict, there are lessons to be learned on how support to fragile and conflict-affected situations can be made more effective. Across the development community, there are renewed calls for shifting the international community’s support from crisis management to proactively addressing the risks and drivers of fragility and conflict. Any efforts to mitigate fragility and conflict risks such as weak economic performance and fiscal capacity need to be founded on the following principles.
Fragile and conflict-affected states represent the frontlines of development in a world facing multiple crises.
One, support must be built on sound diagnostic and analytical work. Fragility and resilience assessments and scenario planning are a springboard for designing projects that address development, humanitarian relief and sustainable peace. These assessments also need to be updated regularly to account for evolving situations on the ground.
Two, to help countries move along the fragility-to-resilience continuum, constant and targeted support is needed for capacity development, or equipping a country with agile and nimble approaches to sustainable development. Predictable and well-coordinated training, and education and knowledge sharing support is vital to strengthening governance and building receptiveness to reforms.
Given the tight budgets and mounting debt in fragile countries, support in this area is particularly crucial. For example, better targeting of social protection schemes could have a significant impact. Proper targeting of cash transfers, fuel and fertilizer subsidies and other social protection schemes will help to ensure the sustainability of such interventions and that assistance goes to the intended beneficiaries.
Targeted transfers or subsidies are more cost effective than universal transfers or general subsidies as the latter tends to be more costly and benefits mostly high-income groups. Furthermore, support is needed to strengthen revenue mobilization systems, including by strengthening the tax administration processes.
Three, humanitarian, development, and peace organizations must strengthen their cooperation beyond the conceptual approach and pursue structural changes in their delivery of aid in fragile and conflict-affected situations. This entails humanitarian, development, and peace actors jointly identifying and sequencing their support before, during, and after crises.
As these actors have different mandates, approaches and budget cycles, their work on the ground would be more effective and efficient if they have coordinated processes and procedures. A harmonized approach to fiduciary controls, security rules, project monitoring, procurement policy, and anticorruption provisions would be needed to ensure the effective and timely delivery of assistance.
Fragile and conflict-affected states represent the frontlines of development in a world facing multiple crises. Promoting inclusive, resilient, and sustainable development will only be possible if these states can improve living standards, promote good governance and strengthen institutions, and ultimately escape the fragility trap.