Economics

Explanations

Development: the problem of 'failing states'

Tom White

16th January 2017

According to The Economist, few things matter more than fixing failed states. Broadly defined, state failure provides “a general explanation for why poor countries are poor”.

The article explains that life in a failed or failing state is short and harsh. Life expectancy in the bottom 16 countries on the Fragile States Index compiled by the Fund for Peace, a think-tank (see map), is 85% of the global average. Measured at purchasing-power parity, income per head is a miserable 21%.

In the most extreme form of state failure, in places like Somalia, the central government does not even control the capital city. In milder forms, as in Nigeria, the state is far from collapse but is very weak and unable to control all of its territory. Or, as in North Korea, it controls all of its territory but governs in a way that makes everyone but a tiny elite much worse off.

The main conclusion of the article is that the challenge facing failing states is “institutions, institutions, institutions”. Some societies have “inclusive institutions that foster economic growth”; others have “extractive institutions that hamper [it]”.

South Sudan failed to build institutions that were stronger than tribal loyalties, or that could curb the power of warlords. The country has government buildings, including state ministries of education, culture and health. But none of them does much. Nowhere in South Sudan does the state do what it is supposed to. Only 27% of adults can read, according to the UN. Preventable diseases such as cholera, measles and malaria are rampant. The rule of law is a distant dream. The country’s political system is broken, so that government money is typically stolen or spent on weapons.

Depressingly, many experts are pessimistic about failed nations’ chances of turning around on their own. Extractive institutions typically have historical roots. But failed states are not doomed to stay that way. Between 2007 and 2016, according to the Fragile States Index, 91 countries grew more stable and 70 grew shakier. Among those improving were giants such as China, Indonesia, Mexico and Brazil. The worst performers were mostly smaller, such as Libya and Syria. Even states that have collapsed completely can be rebuilt.

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