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GREAT insights Magazine

A delicate balance: Economic development and job creation in fragile states

February 2016

Buckley, J., McIntosh, K. 2016. A delicate balance: Economic development and job creation in fragile states. GREAT Insights Magazine, Volume 5, Issue 61. February 2016.

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While economic development – and specifically employment – hold the potential to contribute to peace- and state-building, initiatives focused on growth do not necessarily innately support these goals and, in certain circumstances, even hold the potential to exacerbate conflict.


Economic development and employment


Since the mid-2000s, donors have increasingly emphasised the importance of working in Fragile and ConflIct Affected States (FCAS). Indeed, the UK Department for Interational Development recently listed FCAS as one of its aid priorities. In such contexts, economic development has frequently been stalled, interrupted, or is in continuation only in pockets of the country. It is widely accepted that conflict depresses growth – especially in the short term. This has an effect on, and can exacerbate, an already deteriorating business environment and associated employment opportunites.

Economic development is widely measured using a Gross Domestic Product per capita indicator, reflecting an increase in the economic productivity and average material wellbeing of a country’s population. This imperfect indicator paints an incomplete picture, however, particularly in relation to drivers of conflict and fragility. Susceptibility to conflict also depends on the type of economic growth and whether this growth is inclusive or benefits a narrow group of actors.

Economic development can also be looked at through a labour lens: jobs are one of the core determinants (and outcomes) of growth and are widely regarded as a key route out of poverty. It is not always the case, however, that employment creation automatically contributes to growth and poverty reduction. Informal, vulnerable, low paid, and hazardous jobs are likely to have a lower potential transformative impact for those working in them similarly, as a process, economic growth – unlike inclusive growth – does not actively account for the concepts of inclusivity and equity – the absence of which, can be a key driver of conflict.

In order to better understand how policies around economic development and employment can have a positive, meaningful impact in fragile situations, it is necessary to understand often overlooked factors, including: the importance of inclusion in growth, the potential for growth to exacerbate conflict, and the trade-offs often required when economic development objectives do not directly support peacebuilding and state-building.


Inclusion


There is growing evidence of the importance of inclusive political settlements (an organisation of political power which can include, or exclude certain groups and be contested), in helping prevent the occurrence of types of conflicts, including ethical and regional ones. In enabling a sustainable exit from conflict, particularly in contexts where exclusion has been a major conflict driver, donors face a tension between supporting short-term stability based on an – essentially exclusive – narrow elite (for example, as in the cases of Nigeria, Afghanistan and the DRC) or pushing for an inclusive settlement (as in Zambia and South Africa) which, in turn, has consequences for the inclusivity of economic development.

Concerning jobs, there is a need for a shift away from initiatives that promote job creation alone towards those that consider the distribution of employment, the targeting of jobs and the resulting impact on poverty and conflict reduction. Challenges associated with job creation, unique to FCAS contexts, include: sustaining the reintegration of ex-combatants, refugees and Internally Displaced Persons; balancing equity and security considerations; and addressing the root drivers of employment accessibility such as access to land and natural resources. In order for job creation to be inclusive and supportive of peacebuilding efforts, all these challenges need to be addressed.


Exacerbation of conflict


An often overlooked possibility is that certain types of economic development sectors and activities can actually generate violent conflict – for example, the oil and gas sector in the Niger Delta in Nigeria is a driver of conflict in itself. This is not to say that economic growth should not be pursued as an objective of development initiatives – rather that the process can have winners and losers as the social and economic order changes. Similarly, regional and international factors can influence the continuation of conflict – regardless of its initial cause – for example, by presenting an opportunity for exploitation of a resource in the absence of international regulatory mechanisms and a functional national government. This is the case in the DRC with the mining of coltan, in Liberia with the extraction of diamonds and in Syria, with oil exploitation. Such commodities cannot be deemed indifferent to peace and require policy makers to understand how local conflicts and violent entrepreneurs interact with, and in some instances actually sustain, wider economic processes.

On the flip side, conflict may also result in an organisation of political power whose interests actually end up being – albeit, perhaps unintentionally or unconsciously– ‘developmental’. For example, the success of the Arab Spring in Tunisia has led towards democratic reform and a focus on alleviating underlying causes of conflict. Studies have highlighted that the rise in female headed households, post-conflict, can challenge men’s control over economic resources. Similarly, post-conflict institution building can present opportunities to challenge discriminatory structures e.g. gender-sensitive police reform in Rwanda and Liberia.


Trade-offs


Policymakers must also consider the temporal element of economic development processes in FCAS contexts. Sometimes an immediate focus on generating employment can clash with other objectives in a fragile environment (e.g. longer-term, inclusive peace- and state-building objectives), requiring challenging trade-offs to be made. These trade-offs need to be carefully considered given the general global paucity of evidence on the impact of immediate job creation interventions on long-term employment, the inclusivity of programmes across groups, or peacebuilding and state-building objectives.

Similarly, there needs to be a distinction between emergency – e.g. cash for work – short-term and long-term employment. While generating employment in the immediate-term is important, if real economic opportunities remain limited, it is unlikely to be sustained in the long-term. This is particularly important for policymakers when considering support for job-creating, labour-intensive works and more productive capital-intensive projects. Focusing on short-term employment may mean forgoing opportunities to tackle structural drivers of conflict, e.g. a lack of public goods. Examples of where concerns over access to employment and public services have fuelled conflict include Sri Lanka and South Sudan.


Ensuring conflict sensitivity: implications for policymakers


Overall, it’s important to remember that neither jobs nor economic development guarantee that the poor and marginalised will participate and benefit from growth. Yet both have a place in the narrative of peacebuilding and state-building and there is a growing awareness that development and peace processes must progress in parallel. Growth can stimulate job creation, which reduces grievances and incentives to engage in conflict, but it’s a fine balance, and in some circumstances, such growth can also exacerbate conflict.

Effectively addressing fragility as a driver of poverty and instability requires a more robust understanding of this fragility in the first place. Interventions aiming to promote economic development and job creation in such contexts need to be sensitive to how they may interact with conflict dynamics and adapt their programming accordingly. Doing so will support a more robust and nuanced understanding as to how peace is won – and sustained.

About the authors

GREAT_Insights_Vol5_iss1_Joanna_Buckley     GREAT_Insights_Vol5_iss1_Kate_McIntosh

Joanna Buckley and Katie McIntosh are development economists at Oxford Policy Management, a leading international development consultancy. Joanna leads the Conflict, Security and Violence team and Katie leads the consultancy team in Tanzania.

Twitter: @OPMGlobal

e-mail [email protected]

 


Photo: Adult students listen carefully to their teacher during an adult literacy course, in a classroom in a secondary school in Gaga refugees’ camp. / UNHCR /F. Noy / December 2011

This article was published in GREAT Insights Volume 5, Issue 1  (February 2016).

Conflict, Security and ResilienceEconomic Transformation and TradeBusiness and DevelopmentConflictFragile statesPeacebuilding

External authors

Joanna Buckley

Katie McIntosh