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Is there a fail-safe model of development for resource rich, income poor, post-conflict countries?

Errol Graham's picture
Parliament in session, Liberia. Photo credit: FrontPageAfricaOnline
Some say natural resources are a curse, others say they are neither curse nor destiny (see here and here for examples). The jury may still be deliberating on the evidence but, in the meantime, resource-rich, income poor countries like Liberia, Sierra Leone and others need to find their way forward. They have to be responsive to the enormous needs of their populations or face dire consequences.

For post-conflict countries, the policy learning curve must of necessity be steep, since they neither have the luxury of time nor the expanse of fiscal space to benefit from learning by doing over the longer-term. A primary challenge for policy makers in these countries is to identify a “a fail-safe” model that can, with few degrees of freedom on the political, social, and economic dimensions, deliver sustained, inclusive growth and poverty reduction at levels that will appease a youthful, impatient population.

There may be no universal prescriptions for such a model.

However, real world experiences from successful resource rich countries such as Canada, Norway, and Botswana, as well as some recent post-conflict experiences suggest, in my view, that there are perhaps three key areas for policy focus that make for a good model of development for resource-rich countries emerging from conflict: (i) governance, (ii) employment, and (iii) economic transformation. But, even this limited agenda raises many questions, given the challenges of multiple priorities in post-conflict countries.

First comes good governance
Most countries emerge from conflict with a substantial deficit in governance and social capital. Indeed, poor governance may have been a major driver of the conflict in the first place. The objective of a good governance agenda should therefore be to clearly demonstrate to the people, Government’s intent to exercise power and authority on behalf of all the people and not for just a few politically or economically powerful elites.

A good governance agenda is not an easy pursuit, however. On the political side, it requires strong institutions to govern the actions of organizations and individuals. Importantly too, it requires the authority of the rule of law and the systems to maintain it. For example, the rule of law cannot be implemented without an effective and professional police force and an impartial judicial system.

A high level of transparency and social accountability is also indispensible, especially in post-conflict situations where social capital has been eroded and needs to be rebuilt. An open and transparent budget where revenues (including rents from the natural resource sectors) and expenditures are published on a timely basis builds trust, more so if civil society is also consulted on the budget priorities.  

A good governance agenda also presumes some key economic fundamentals including policies to promote inclusive economic growth through human capital development and an effective regulatory environment to encourage the development of a competitive private sector.

With limited financial resources and very low capacity, the question is how to effectively implement this governance agenda? Is there an effective “governance lite” for post-conflict, low capacity countries?  Which elements of the governance agenda give the biggest bang for the buck? How long does it take to build a “culture” of good governance?
It would be interesting to hear the thoughts of economists and other development practitioners on what the essentials of a fail-safe model of development for resource rich, income poor, post-conflict countries should be.