Last month’s World Bank and IMF Annual Meetings culminated in four Marrakech Principles to guide international assistance in the face of the lowest medium-term growth prospects in decades, and the specter of worsening climate change, disasters, conflicts, debt crises and extreme poverty. Named after the Moroccan city where the Annual Meetings took place, the principles focus on promoting inclusive and sustainable growth, resilience, transformational reforms, and global cooperation in an age of geopolitical and economic fragmentation.
The principles affirm support for fragile contexts. However, this support gives priority to promoting inclusive and sustainable growth in fragile countries, not building resilience to the high risks and converging crises that are defining features of fragility.
The stakes for properly addressing fragility could not be higher. Fragile contexts have been the hardest hit by the pandemic, war in Ukraine and climate change. These global crises have collectively spiked food and energy costs and compounded already increasing conflicts and high concentrations of extreme poverty in many of these countries. A staggering 86% of the world’s poorest are now estimated to live in fragile contexts by 2030.
The World Bank’s fragility strategy gives priority to both resilience and promoting inclusive growth, job creation, service delivery and social cohesion—raising the question of what frameworks and pathways are best to advance these combined goals in ways that help these countries exit their predicament.
Looking to the Marrakech principle on building resilience for guidance, we see an emphasis on partners helping to strengthen country institutions and policy frameworks, bolster global crisis preparedness and response, assure macroeconomic stability, and decouple climate risks from growth. While countries like Haiti have made surprising progress on macroeconomic stability in the face of political upheaval, security threats, debt crises and disasters, the path to inclusive growth and resilience through stronger institutions and policy frameworks is less defined or assured.
An emerging literature has shown how strong institutions are poorly correlated with growth prospects in developing economies. Deals between elites and firms are far more likely to bring about growth accelerations than effective institutions in early stages of development. There have in fact been surprisingly high growth episodes even in low-income fragile contexts with weak institutions. The problem for most frontier and emerging markets is not initiating growth episodes but sustaining them. Stagnation and cycles of boom and bust are the norm in these places–owing to conflicts, disasters, epidemics, financial crises, and terms of trade shocks.
The trick, according to long-range, comparative research of Bangladesh, Ghana, Thailand, Malaysia, Malawi, Uganda, Rwanda, India, Cambodia, and Liberia, is gradually ensuring that growth episodes lead to investments in greater productivity, diversification and redistributive institutions, instead of preserving closed economies that benefit the few and are vulnerable to shocks and collapse. A critical first step in this direction is a commitment by ruling elites to a pro-growth approach that helps to politically order and enforce deals with firms that have the capacity to usher in growth.
In Rwanda, Malaysia, and Thailand, this was done through ruling political parties that had the ability to enforce business deals that led to growth. In India and Bangladesh, opposing elites agreed to share rents and provide political and operational guarantees to firms in favor of growth, sometimes through exclusionary deals and other times through fixing a space for open competition. This depended on several factors including the power and political appeal of the firms involved.
Critically, from a resilience lens, these studies highlight the importance of major crises as a driver that shaped elite consensus and rent sharing to allow their economies to grow and avoid future catastrophes. This was the case in Rwanda, Ghana, Malaysia, Thailand, and Bangladesh. However, what the research does not cover is how crises-induced deals for growth also resulted in path-altering investments for resilience.
Bangladesh’s high growth episodes were the result of rent-sharing between elites to guarantee firm deals in key sectors. But these growth episodes also led to public investments in resilient infrastructure, energy, communications, agriculture, and women’s empowerment in the face of high economic and environmental fragility. The impetus for these resilient investments was a historic famine and civil war in the 1970’s that shaped the national narrative, moral convictions, societal demand, and political orientation for resilience. Rwanda similarly invested not only in productive capacities but in resilience, including safety nets and livelihoods support in marginalized and impoverished areas in the aftermath of genocide.
The World Bank’s own analysis has highlighted how today’s most peaceful societies and advanced economies were fragile states for “most of their historical trajectory” and how long-term growth in these countries was more the product of “not shrinking” in the face of conflict and economic crises than of spurring rapid growth episodes.
While enormous attention has been placed on high rates of growth in China, Vietnam, Indonesia, Singapore, Malaysia and Bangladesh, there were quiet, underappreciated investments in resilience by many of these countries, among others, that massively reduced global disaster deaths by 85% since the 1980’s, tamed boom and bust cycles, and enabled higher levels of sustained growth. Separate studies comparing Bangladesh, Ethiopia and Uganda have shown that the key to sustainable poverty escapes is local investments in resilience to help communities better deal with shocks and stress.
By these lights, investments in resilience have enabled long-term growth and sustainable poverty escapes in (historically) fragile states. What is more, major crises in many of these contexts had the effect of compelling elites to craft politically viable and ordered business deals that resulted in more inclusive growth, institutions and resilience over time.
History is of course replete with major conflicts and crises that did not lead to resilience or growth. This raises the question of how international partners can better support pathways to resilience at key turning points in these countries, drawing on the momentum and societal demand from past crises or seizing the moment in the wake of recent conflicts or disasters. Importantly, not all fragile contexts are experiencing conflict. Of the OECD’s 27 chronically fragile contexts, 19 of them have not experienced a major war in over a decade, offering easier entry points for resilience.
To help fragile countries in this age of crises, two steps are critical. The first is to create a formalized resilience approach to guide investments in fragile contexts. Most country investments in resilience have received piecemeal support from international partners that have lacked an overarching resilience doctrine for these investments. In Marrakech, Sierra Leone’s Minister of Finance, Sheku Bangura, speaking for a group of conflict and fragility affected countries called the g7+, told World Bank and IMF leadership there was an absence of a guiding resilience framework to support knowledge and financing in fragile contexts.
Over the last several years, there have been advances in developing such a framework by the OECD, UN, USAID, World Bank, and non-governmental aid agencies like Food for the Hungry. Despite variations within these frameworks, there is a consensus that resilience should help to foster capacities within states, systems, markets, and communities that can absorb, adapt, and transform in the face of complex risks and converging crises. This includes ensuring that conflict and crisis prevention efforts are part of resilience approaches and not stand-alone initiatives without coherent links to mitigation, adaptive and transformative measures if prevention fails.
These frameworks must be mainstreamed at higher levels within donor and multilateral institutions and form the basis for a shared approach to help fragile settings. Otherwise, they will remain as ships passing in the night and foreclose on more joined up efforts for collective understanding and action. USAID’s resilience policy revision declares that resilience will extend to every sector and country where the Agency works and be elevated to a top level priority for partnerships and planning. This is a major step in the right direction.
The second step is to identify the pathways from fragility to resilience in hard places. Partners have a key role in supporting a more ordered deals environment in fragile settings, where ruling elites and firms can be offered incentives, capacities, and support to guarantee productivity and resilience enhancing investments. International partners were critical to post-war Liberia’s growth acceleration in the mid-2000s owing to a range of coordinated external efforts for economic, governance and developmental reforms.
These coordinated efforts took place within a country platform, where the government, donors, multilaterals, societal stakeholders and implementing partners engaged in dialogue, troubleshooting, mutual accountability, policy frameworks and project alignment, and collective action—a key mechanism recognized by the World Bank.
These platforms have been tried over the last two decades in a range of fragile contexts, but without the benefit of a guiding doctrine, learning agenda and visibility within the broader development community from which to garner greater interest and support. This is starting to change with more formal attention and support to country platforms from the OECD, World Bank and UN, and with greater resolve from the US government and IMF to support country-led coordination mechanisms.
Because pathways to resilience, poverty reduction and inclusive growth are the work of generations, and proceed in non-linear ways in the face of repeated crises–country platforms are vital mechanisms for long-range support. Now in its thirteenth year, increasing evidence has shown the value of Somalia’s country platform in advancing resilience, political settlement strengthening, institution building and inclusive development through donor financing and policy guarantees, access to loans, and aid programs in the face of overwhelming odds and across various crises, elections, and governments.
The Marrakech principles’ preamble notes how “Our understanding of the major risks and disruptive forces facing the global economy has evolved.” We must now evolve our understanding of how to foster and support resilient frameworks and pathways to help those in the hardest places in this age of crises.