Fixing Failed States

Ashraf Ghani has taught at Johns Hopkins, Berkeley, and Kabul University, worked at the World Bank, served as Finance Minister of Afghanistan, and been credited with a range of successful reforms in Afghanistan in the years following 9/11. He is currently the Chairman of the Institute for State Effectiveness. Clare Lockhart is Director of the Institute for State Effectiveness. She has worked for the World Bank and the UN and played a key leadership role in developing the National Programs approach to Afganistan’s reconstruction efforts. Together Ghani and Lockhart wrote Fixing Failed States: A Framework For Rebuilding A Fractured World, which explains through vivid on-the-ground examples why past attempts to rebuild states have failed and advance a groundbreaking new solution to the crisis. In the original article below they outline what makes a successful state. Listen to a podcast of Ghani at the Carnegie Council here.

Given the historical and geographic variability of state functions, it might seem bold to declare that there are ten of them (why not nine of eleven?). Nevertheless, based on our reading of history, our engagement with international development, and our first hand experience with the challenge of state building in one of its most difficult contexts, we have concluded that states in the world today must perform the following ten key functions to succeed.

1) Rule of Law

The most crucial function of the state is law making (i.e. establishing the rules by which society operates). Laws define both the powers and the limits of the state and the people within that state.

2) A Monopoly on the Legitimate Means of Violence
State controlled use of violence (military/police activity), encompasses three distinctive elements. Complete authority over the means of destruction and the use of force. The legitimacy needed to subordinate violence to the decision making process (voting/elections/laws). And in extreme cases, the use of force, according to the rules of law, against those citizens of the state who challenge its legitimacy.

3) Administrative Control
The state must establish a bureaucratic system of checks and balances. A system that is managed by governmental professional who are accountable to the citizenry. Each division of the government performs specialized functions, has continuity over time, and is overseen at a higher level.

4) Sound Management of Public Finances
Create a budget and stick to it! A proper budget brings both the rights and duties of citizenship into balance. Each entitlement must have a line of expenditure and each expenditure must be matched by a source of revenue. The key elements are wealth creation and involvement of the citizenry in taxation and redistribution.

5) Investment in Human Capital
Among the many investments are the creation, development, and growth of institutions of Higher Education and the availability of a national healthcare infrastructure. Health and education produces a mentally and physically vital citizenry, which is in turn crucial to a successful state.

6) Creation of Citizenship Rights Through Social Policy
Empower citizens through equal opportunity. When the state uses social policy as an instrument for the establishment of equal opportunities, the social fabric created can lead to a sense of national unity and a shared belief in common destiny. Key social policy starts with the right to vote, and extends into regulating labor practices and establishing fiscal welfare programs.

7) Provision of Infrastructure Services
The state must provide everyday necessities such as adequate transportation, power, water, communications, and pipelines to establish its overall ability to produce less mundane functions such as security, administration, investment in human capital, and the necessary conditions for a strong market economy.

8 ) Formation of a Market
The state must support the creation and expansion of an open economic market through three major measures: setting and enforcing rules for commercial activity, supporting the operation and continued development of private enterprise, and intervening at times of market failure.

9) Management of Public Assets
Every state has three areas of natural resources to oversee: the management and allocation of rights to land and water, the sustainable use of natural capital, including extractive industries (i.e. mining and drilling), the management, and protection of the environment, including forests, and the licensing of industrial commercial activities.

10) Effective Public Borrowing
Put simply, do not take on bad debt or take on too much debt. Beware of the sovereign guaranty from international lenders. Maintain public disclosure and monitoring of the fulfillment of debt obligations.

The performance of these ten functions produces a clustering effect. When the state performs all ten functions simultaneously, the synergy creates a virtuous circle in which decisions in the different domains reinforce enfranchisement and opportunity for the citizenry. This supports the legitimacy of the decision makers and their decisions, builds trust in the overall system, and thereby produces a “sovereignty dividend.”

Conversely, when one or several of the functions are not performed effectively, a vicious circle begins: Various centers of power vie for control, multiple decision-making processes confuse priorities, citizens lose trust in the government, institutions lose their legitimacy, and the populace is disenfranchised. In the most extreme cases, violence results. This negative cycle creates a “sovereignty gap.”