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Picking Up The Pieces

Otaviano Canuto's picture

For the 600 million people living in fragile and conflict affected economies, the threat of relapsing into violence and slipping into deeper poverty is a reality they must face every day. Believe it or not, poverty rates average 54% in fragile and postconflict economies, compared with 22% for low-income countries as a whole. Weak institutions and a lack of local capacity further undermine the delivery of core services, such as security, rule of law, and other public goods.

So what happens when the fighting stops and the reconstruction begins? What happens to local capacity in countries where qualified civil servants have either fled to escape the conflict or were killed during it? A new study on public financial management reforms, produced by the World Bank’s fragile states and public sector governance units, shows that progress is possible even in such difficult circumstances.

In the most recent edition of the Bank’s Economic Premise series, “Strengthening Public Financial Management in Postconflict Countries,” the authors surveyed public financial management reform approaches in eight of the world’s most fragile and conflict-prone economies. Through a case study analysis of these fragile and conflict affected economies, the authors conclude, “Reform progress can be made under difficult circumstances—including high levels of continuing insecurity, absence of any prehistory of independent statehood, and acute levels of underdevelopment.”

Nevertheless, challenges remain. While fragile economies can make substantial and relatively rapid progress in public management reforms, state building is still lagging. Accordingly, I agree with the authors that by building local capacity, focusing on procurement and public awareness, and engaging sub-national levels of governance, better state building results can be seen.

For a full account on how fragile and conflict affected economies are progressing with public financial management reforms, and to see how state building efforts can be improved, this week’s Economic Premise is a must read.