Engaging with fragile states: An IEG review of World Bank support to low-income countries under stress

Home to almost 500 million people, roughly half of whom earn less than a dollar a day, fragile states, until recently known in the World Bank as Low-Income Countries Under Stress (LICUS), have attracted increasing attention. Concern is growing about the adverse economic effects they have on neighboring countries and the global spillovers that may follow. With their multiplicity of chronic problems, LICUS pose some of the toughest development challenges. Most have poor governance and are embroiled in extended internal conflict or are struggling through tenuous post-conflict transitions. They face similar hurdles of widespread lack of security, fractured relations among societal groups, significant corruption, breakdown, in the rule of law, absence of mechanisms for generating legitimate power and authority, a huge backlog of investment needs, and limited government resources for development. Past international engagement with these countries has generally failed to yield significant improvements. The donor community is grappling with the question of how best to assist countries faced with such challenging problems. With their differing motivations and objectives, donors and researchers have chosen to address different aspects of these problems, which has led them to focus on slightly varying groups of countries. For instance, recent research by the Center for Global Development focuses on stagnant low-income countries (defined by gross national product per capita and growth rates), and the Failed States Index of Foreign Policy focuses on state failure, identifying countries bases on such factors as the level of economic decline, security, factionalized elites, displace persons, human rights breaches, and external intervention. The U.S. Agency for International Development aims to address issues surrounding vulnerability and crisis, many pertaining to the political environment. The U.K. Department for International Development (DFID) and the Organisation for Economic Co-operation and Development-Development Assistance Committee's (OECD-DAC's) definitions of fragile states are similar to those used by the World Bank.