Ending extreme poverty in fragile contexts - Getting to Zero: A USAID discussion series
Ending extreme poverty in fragile contexts - Getting to Zero: A USAID discussion series
http://www.usaid.gov/endextremepoverty/fragile-contexts
Over the past 20 years, there has been
encouraging progress towards the goal of ending extreme poverty, with nearly
700 million people rising above $1.25 a day since 1990.1 This impressive
progress has made it conceivable for the world to eradicate extreme poverty by
2030. To do so, we need to support legitimate, effective governing institutions
and promote robust and inclusive economic growth, * but fragile states, † in
particular, face difficult hurdles. Poor and undemocratic governance, weak and
corrupt institutions, and entrenched power dynamics all contribute to extreme
poverty. Support for country transitions out of fragility, therefore, is a key
element for accelerating and sustaining broad-based growth and reducing
poverty. Most of the gains in extreme poverty reduction over the past two
decades have taken place in higher performing countries that have not
experienced the challenges of conflict or the severely limited capacity of
ineffective governing institutions. 2 A country that experienced major violence
over the period 1981-2005 has an extreme poverty rate 21 percentage points
higher than a country with no violence.3 Of the seven countries unlikely to
meet any of the Millennium Development Goals (MDGs) – including to halve
extreme poverty – six are fragile states.‡4 Indeed, roughly 400 million extreme
poor currently live in fragile states, a number that has remained essentially
unchanged since 1990. 5 Although this is currently only about one-third of the
total global population living in extreme poverty, it is these types of
countries that are projected to be home to roughly half of all of those living
under $1.25/day by 20156 and, between now and 2030, the challenges of extreme
poverty will increasingly be found in fragile states. Ending extreme poverty,
then, will not be possible without understanding and tackling the sources of
fragility. While making sustainable progress is challenging and complex, we
know that development is possible, even in the most fragile environments. In
2011, trends indicated that not one low-income fragile state was on track to
meet a single MDG, but by May 2013, roughly 20 low-income fragile states§ had
hit at least one of their goals7 and eight fragile states, including Guinea, Nepal,
and Timor-Leste, have now met MDG1 by halving their extreme poverty rate. 8
Supporting such transitions will require that the international community learn
more about the nexus of fragility and extreme poverty. This discussion paper
frames the issue and lays out some of the questions for discussion in the
months and years ahead. * See USAID’s discussion paper “Getting to Zero”
(November 21, 2013) for more background, definitions, and a snapshot of the
global trajectory towards zero. † In order to draw on the broader literature,
the evidence presented here relies on data and analysis based on several
different definitions of fragility beyond our own (see Box 1), including the
OECD and the World Bank. Though these approaches yield somewhat different lists
of fragile states, there is significant overlap between them. Thus, we are
careful to cite our sources, but we are not able to present a holistic overview
of existing research and evidence without mixing the different definitions. ‡
The Democratic Republic of the Congo, Cote d’Ivoire, Haiti, Somalia, South
Sudan, and Kosovo § The 20 countries are Afghanistan, Angola, Bosnia and
Herzegovina, Comoros, Guinea, Guinea-Bissau, Iraq, Kiribati, Liberia, Libya,
Marshall Islands, Federated States of Micronesia, Burma, Nepal, Sudan, Syria,
Timor-Leste, Togo, Tuvalu, and West Bank and Gaza. Eight – including Guinea,
Nepal, Bosnia and Herzegovina and Timor-Leste – have already halved extreme
poverty. 2 CONNECTING FRAGILITY, CONFLICT, AND EXTREME POVERTY The link between
fragility and conflict** has important implications for extreme poverty. Not
all states experiencing conflict are fragile, but most of them are; and not all
fragile states experience conflict, although most of them have. 9 Conflict
becomes more likely when segments of society question whether the government’s
exercise of power is fair and inclusive. 10 And the violence from armed
conflict has severe consequences for economic growth – it destroys assets,
undermines livelihoods, and diverts public resources from economically
productive investments. It takes an average of 14 years to restore pre-war
economic growth trajectories in countries that experienced civil war. 11 Much
of the connection between fragility and armed conflict relates to legitimacy,
the key elements of which include accountability, inclusiveness, and
transparency. The lack of legitimacy in a state can lead to conditions where
violent conflict is more likely, particularly where a history of violence
exists. For more than a decade, the Democratic Republic of the Congo (DRC) has
been recovering from a series of violent conflicts, including the deadliest
conflict since World War II, the Second Congo War. 12 Despite halting progress
on political and economic reforms, the DRC is still faced with the challenges
of weak institutions and corruption, and up to 85 percent of the population
continues to live in extreme poverty.13 Governing institutions that lack the
key elements of legitimacy have little ability to support the peaceful
resolution of societal conflicts. For example, illegitimate governance can
entail economic institutions or financial services that are corrupt and/or
exclude large segments of society, thus limiting economic opportunity. Economic
and social disenfranchisement are two of the most common drivers of internal
conflict and instability, 14 and this also has implications for poverty
reduction. Where there are weak or corrupt institutions, even high rates of
economic growth will not necessarily translate to reductions in extreme poverty.
Two illustrative examples can be found in Nigeria and Zambia, where rapid
growth has not contributed to significant poverty reductions. A revealing
indication of such ineffectiveness is a large gap in access to basic services
between the poor and the non-poor or between genders.15 While the absolute
number of the poor is equally divided by gender, existing inequalities in
employment, health, education, and violence tend to make women more vulnerable
to extreme poverty,16 e.g., higher overall work burdens, lesser access to
productive resources, and fewer ** This paper draws on the definition developed
by the Uppsala Conflict Data Program, which defines a conflict as “a contested
incompatibility that concerns government and/or territory where the use of armed
force between two parties, of which at least one is the government of a state,
results in at least 25 battle-related deaths.”** Based on this definition,
there were 24 countries experiencing active conflicts at the end of 2012. A
conflict-affected country is either currently experiencing active conflict or
had had a conflict end in the last ten years. Box 1 – Defining Fragility USAID
has developed the following definition of fragility based on the Fragile States
Strategy (2005) : Fragility refers to the extent to which statesociety
relations fail to produce outcomes that are considered to be effective and
legitimate. Inherent in this definition is the understanding that fragility is
a characteristic of state-society relations, not just of governing institutions.
This definition also establishes fragility as a two-dimensional concept; both
effectiveness and legitimacy are equally important to our understanding.
Effectiveness refers to the capability of the government to work with society
to assure the provision of order and public goods and services. Legitimacy
refers to the perception by important segments of society that the government
is exercising state power in ways that are reasonably fair and in the interests
of the nation as a whole. Finally, fragility affects state-society relations in
gradations, i.e., it is not a condition that is either completely present or
absent. By implication, countries with the high levels of fragility can be
expected to face steeper challenges in reducing extreme poverty than those with
lower levels. 3 assets to draw on in times of emergency.17 The extent to which
growth reduces extreme poverty depends on context, including whether the
country promotes policies and provides services that enable the extreme poor
and vulnerable populations to participate in growth; 18 evidence shows that it
requires much higher growth rates to reduce poverty in countries with high
levels of inequality.19 KEY FINDINGS Illegitimate governing institutions and
ineffective delivery of key services—the cornerstones of fragility—contribute
to extreme poverty. Moreover, the evidence suggests that fragility makes armed
conflict more likely, too. When armed conflict does erupt, it further
exacerbates extreme poverty. In all, the mutually reinforcing relationship
between fragility and armed conflict creates circumstances that perpetuate
extreme poverty. The following key findings highlight the evidence and
underscore the importance for promoting more inclusive, effective, and
accountable governance and supporting strengthened conflict prevention as a
means toward reducing extreme poverty. Extreme poverty will be increasingly
concentrated in fragile states over the next two decades. A growing evidence
base suggests extreme poverty is not receding in those places affected most by
fragility and conflict; 21 where the absolute number of extreme poor has
remained roughly the same since 1990. 22 While onethird of the global poor
lived in fragile states in 2010, projections indicate that roughly half will do
so by the year 2015.23 A decade ago the majority of fragile states were
low-income countries – today, fragility is almost evenly divided between
middle-income (MICs) and lowincome countries (LICs). 24 Even as fragile states
have reached MIC status, extreme poverty will increasingly be concentrated in
fragile states. In these countries, economic growth projections are relatively
pessimistic and population growth remains relatively high.25 The mutually
reinforcing relationship between fragility and armed conflict perpetuates
extreme poverty. There is a strong correlation between state fragility and
conflict. Of the 37 countries identified as fragile by the World Bank in 2010,
almost all were postconflict or conflict-affected.26 Evidence from the 2011
World Development Report shows that violent conflict contributes to extreme
poverty; on average, a country that experienced major violence over the period
1981 to 2005 had a poverty rate 21 percentage points higher than a country that
experienced no violence.††27 For every three years of major violence, extreme
poverty reduction in affected countries was 2.7 percentage points lower on
average than in countries affected by only minor or negligible violence. Syria
lost 35 years of development gains between †† Estimates based on the World
Bank’s PovCalNet database, which calculates extreme poverty estimates for
developing countries, i.e., low income, lower middle income, and upper middle
income countries (up to $12,615 GNI per capita in 2012). Box 2 - Links Between
Extreme Poverty and Fragility: A Data Snapshot** - A country that experienced
major violence over the period 1981-2005 has an extreme poverty rate 21
percentage points higher than a country that saw no violence. - Strong
education and health systems are essential to growth and extreme poverty
reduction,20 but people in fragile states are: more than three times as likely
to be unable to send their children to school; more than twice as likely to be
under-nourished; and twice as likely to see their children die before age five.
- A country making development advances, such as Tanzania, loses an estimated
0.7 percent of GDP every year for each neighbor in conflict. - The average cost
of civil war is equivalent to more than 30 years of GDP growth for a
medium-size developing country. * 2011 World Development Report 4 2011 and 2013
as a result of the conflict, according to a UNRWA study.28 Conflict can have
longlasting negative impacts on extreme poverty eradication even in MICs. ‡‡
Fragility impedes significant reductions in extreme poverty. By 2015, extreme
poverty levels in fragile states are estimated to remain over 50 percent,
higher than starting levels in 1990 and significantly higher than in
non-fragile states. 29 More challenging in these contexts is the “fragility
trap” phenomena – a self-perpetuating cycle of weak institutions, low
investment, slow growth, and repeated violence that keeps countries from
strengthening the policies and building the institutions needed to transition
out of fragility. 30 The outlook is more promising, however, for countries that
do escape fragility and conflict. According to World Bank classifications, 11
countries have graduated from fragile state status since 2004 while achieving
average economic growth rates of 4.3 percent.31 Countries like Cambodia, Laos,
Mozambique, Rwanda, Uzbekistan, and Vietnam experienced rapid economic growth
following periods of severe political instability. 32 The “neighborhood effect”
may negatively impact the ability to reduce poverty across a region. Evidence
shows that countries with neighbors experiencing civil wars suffered losses in
GDP growth equal to 0.7 percentage points per year on average. 33 Additionally,
fragile states tend to be geographically clustered. 34 However, even in regions
where conflict-affected fragile states border others with no armed conflict,
political instability and armed conflict in one country can generate subsequent
unrest and instability in neighboring and regional countries 35 as well as
economic ripple effects through the region. Thus, the impact of a neighborhood
war may have deleterious effects on extreme poverty in peaceful neighboring
states. More recent research shows an even higher annual loss of 1.5 percentage
points of economic growth for countries that border a “Low Income Country Under
Stress”. Since these countries typically lose about 2.3 percentage points but
have an average of three neighboring countries, the region’s aggregate losses
are much higher than losses to the country itself.36 MOVING FORWARD An international
effort between now and 2030 to assist more than 1 billion people rise out of
extreme poverty requires a greater understanding of the nature of fragility.
From years of experience, USAID knows there are opportunities to help lift
populations out of extreme poverty through promoting inclusive growth,
investing in institutions, and supporting capacity development efforts for
state and non-state actors, among other interventions. To marshal the full
potential of societies, it is essential to support inclusive and accountable
governing institutions. Without the involvement of civil society, women, youth,
and marginalized groups in efforts to support access to basic services, access
to justice, and invest in transparency and accountability in public institutions,
we will continue to live in a fragile world where shocks can wreak havoc,
illegitimate leadership prevails, and extreme poverty remains. Going forward,
we must scale existing partnerships and develop new ones to draw in fresh
perspectives and innovative thinking. In doing so, we must focus on applying
lessons learned, leveraging partnerships, and engaging in key policy
discussions. ‡‡ Development gains in this context classified according to the
Human Development Index, which includes average income levels, health and
education. See http://www.unrwa.org/userfiles/2013071244355.pdf 5 Applying
Lessons Learned: Much work has been done – by the OECD, World Bank, g7+ and
others – on how to best support progress in fragile states.37 This includes the
need to focus on building confidence in institutions – which requires capacity
development and sensitivity to historical animosities and marginalization – as
well as building resilience in areas of chronic vulnerability (see Box 3). In
countries lacking a credible governmental partner, work must continue to focus
on civil society supporting their efforts to influence positive change. The key
is rapid action to rebuild confidence combined with longer term structural
reform based on careful analysis of the drivers of conflict. *** It is also
essential to integrate democracy, human rights and governance principles and
practices into our development approaches. ††† The case of Nepal demonstrates a
concrete example of real development progress in fragile contexts. After more
than a decade of armed insurgency and lingering post-conflict challenges, Nepal
is one of just eight fragile states to have already halved extreme poverty.38
And they did so in just seven years – between 2003 and 2011, the extreme
poverty rate fell from 53 percent to 24.8 percent.39 Furthermore, Nepal has
already met the target for access to an improved water source and for reducing
the maternal mortality ratio by three quarters from its 1990 level. 40 These
development gains, achieved in part from USAID and our partners, are the result
of strengthened local institutions.41 It demonstrates that despite challenging
circumstances, development in these contexts is possible. Other contexts, like
Afghanistan, show the feasibility of investing in local institutions to support
development gains. For example, between 2003 and 2012, USAID invested in
expanding low-cost health services, led by the Afghan Ministry of Public
Health. The 2010 Afghan mortality survey demonstrates significant progress –
life expectancy has increased by 15-20 years, infant mortality has dropped 57%,
under five mortality has declined by 62%, and maternal deaths have decreased
from 1,600 to 327 per 100,000 births.42 Leveraging Partnerships: The New Deal
for Engagement in Fragile States, endorsed in 2011 by the U.S. and forty other
countries and multilateral institutions, calls for the international community
and fragile states to not only “do things differently” but to also “do
different things”. Rather than delve into our traditional toolbox for fragile
or conflict-affected countries and come out with cookie-cutter solutions, we
must prioritize around five Peacebuilding and Statebuilding Goals (PSGs) –
legitimate §§ See USAID’s Resilience Policy *** See USAID’s Policy on Violent
Extremism and Insurgency ††† See USAID’s Strategy on Democracy, Human Rights
and Governance Box 3 – Ending Extreme Poverty by Building Resilience in Fragile
Environments Building resilience to crisis provides essential traction for
vulnerable populations to climb out of extreme poverty. Recurrent
crises—intermittent drought in the Horn of Africa for example—perpetuate
extreme poverty by dislocating communities and destroying livelihoods. In the
last 30 years, the World Bank estimates that one out of every three dollars
spent on development is lost as a result of disasters and crisis. Strengthening
resilience is especially challenging in fragile environments. A strong social
compact between state and society enables more effective governance for
disaster risk management, investment in livelihoods, resource management, and
improvements in social and economic conditions of vulnerable populations. These
are important building blocks for strengthening coping and adaptive capacities
of communities to foster resilience, but these essentials are often absent in
fragile states. To address these challenges, USAID is focused on systemic
solutions to bring together our relief and development partners.§§ USAID’s
resilience programs build adaptive capacity to enable populations to endure and
recover from shocks and stresses to ensure that escaping extreme poverty is
possible. 6 politics, security, justice, economic foundations, and revenue and
services – identified as the main impediments to overcoming fragility. It is
notable that this prioritization places politics, security, and justice
together with jobs and services at the forefront of overcoming conflict and
fragility. Indeed, this approach acknowledges the interdependent connections
among security, governance, and development and the attendant need for systems
thinking to consider these issues as a coherent whole in order to support the
search for innovative solutions. The New Deal represents the first time a
coalition of (currently 18) self-identified fragile states has formed and
articulated a vision for how the international community can better enable
their movement from fragility and conflict to peace and prosperity. Already the
New Deal has provided a platform in those countries that have adopted it for
better strategic planning across governments and donor communities, deeper
connections between government actors and populations, the creation or
improvement of financial management and coordination units, and an improved
focus on the inherent connection between politics and development in fragile
states. The New Deal represents a major sea change, but it is just a start. In
countries that do not selfidentify as fragile there is a difference of opinion
regarding state effectiveness and legitimacy. International actors must respect
government position, but also not be blind to internal dynamics that place
development assistance at risk. In these contexts we must look to engage in
frank conversations regarding citizens’ concerns through, for example,
supporting improved national polling, enhancing civil society capacity and
outreach, reinforcing cross-border learning, and engagement by regional
institutions. Engaging in Key Policy Developments: The Post-2015 discussion is
centered on what will replace the MDGs when they reach the end of their
intended timeline in 2015. The global debate over this next iteration of goals
is a key opportunity to sharpen the international focus on the link between
fragility and extreme poverty, as ending extreme poverty is a core element in
these initial discussions. A number of voices are now calling for a post-2015
framework that will help to foster the development gains in fragile states that
are necessary for the eradication of extreme poverty. In this light, for
sustainable development to be successful, we need to challenge ourselves to
improve our ability to make and sustain development gains in fragile states. To
end extreme poverty by 2030, we must find better ways to support inclusive
growth and mitigate fragility to enable the provision of health care, food
security, education, and other essential services to the world’s most
vulnerable and marginalized. As USAID’s Strategy on Democracy, Human Rights,
and Governance points out, “Poverty is underpinned by poor and undemocratic
governance, weak and corrupt institutions, and entrenched power dynamics that
lead to political and economic exclusion.” Asking the Right Questions: The
general findings from this discussion paper lead to a series of more specific
questions that merit further discussion, research, and analysis. For example:
Questions on Linkages: § How does advancement or backsliding on fragility influence
progress toward eradicating extreme poverty? § What is the theory of change to
solving the link between violence and poverty? 7 § How can improvements in social,
security, economic, or political domains lead to reductions in extreme poverty?
§ Gender inequalities mean women and
girls are more vulnerable to the effects of extreme poverty, and poverty rates
are highest among children.43 How are the most vulnerable extreme poor
populations differentially affected by violence and conflict? § How do poor or missing data
complicate the analysis of trends in extreme poverty in fragile states and
limit our understanding of the linkages between fragility and extreme poverty?
Questions on Programming: § What can be done to improve data to better guide
development strategies to address extreme poverty? § What specific examples of
development programs demonstrate effective poverty reduction while also addressing
the underlying manifestations of fragility? § How do programs that are designed specifically to
reduce poverty, e.g., jobs programs, infrastructure, etc., affect state-society
relations in fragile states? § Given the increasing number of middle-income fragile
states with pockets of extreme poverty, how can development actors enhance the
effectiveness of official development assistance and better link with foreign
direct investment in those countries? § Looking to the future, what technologies, modalities,
resources, actors, or approaches will emerge or become more important and how
will they affect extreme poverty? In order to continue this dialogue, in the
coming months, USAID will convene an expert’s workshop on fragility and an
evidence summit on extreme poverty; these learning events will help identify
gaps in knowledge and bring together evidence around the critical outstanding
questions regarding extreme poverty in fragile environments. We will apply
findings from these engagements to our ongoing learning in the field to define
a framework for action and move us towards the realization of a world without
extreme poverty within a generation. REFERENCES 1 These and other data on
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and Conflictaffected Situations. (Washington: World Bank, 2013) 39 World Bank,
Stop Conflict, Reduce Fragility and End Poverty: Doing Things Different in
Fragile and Conflictaffected Situations. (Washington: World Bank, 2013) 40
World Bank, Stop Conflict, Reduce Fragility and End Poverty: Doing Things
Different in Fragile and Conflictaffected Situations. (Washington: World Bank,
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Things Different in Fragile and Conflictaffected Situations. (Washington: World
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Extreme Poverty Harder to End, and What is the Current Profile of the World’s
Poor? (Washington: World Bank, 2013)
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