Archive for June, 2012

The Rise of the Failed Middle Income State and the Growing Divide between Economic and Political Governance

Earlier today Foreign Policy and the Fund for Peace released their annual ranking of the world’s failed states. The list is based on indicators of 12 different measures of state failure, ranging across social, economic, political, and military factors. This year 34 countries fall into the “Alert” category, denoting those in the worst shape. Somalia and DRC lead the way; the bottom five countries are all in sub-Saharan Africa.

What I think is most interesting about this year’s list is the fact that 12 of the “Alert” states – over a third – are middle-income countries. This is a new high, and indeed the emergence of failed middle income states is a relatively new phenomenon; back in 2006 there were only 3 of these countries. Whereas the failed states list used to be populated almost entirely by desperately poor countries like Somalia, Afghanistan, and Haiti, today we increasingly see a number of countries which combine moderate affluence with dysfunctional political governance, such as Nigeria, Pakistan, and Yemen.

The experiences of these failed middle-income countries present a challenge to a lot of established development thinking. There are two ways to approach this trend, depending on whether you’re a glass-half full or glass-half empty person. On the one hand, it’s possible to ask, how have these countries managed to achieve some economic success, despite the fact that they fare so badly in so many other metrics of state quality and good governance? On the other hand, one can look at these countries and say, why are their political institutions doing so poorly when in economic terms they’re not so badly off? While untangling the causality between economic and political governance has always been an extremely complicated question, it’s generally been assumed that the two improve together; indeed this is the heart of modernization theory. But for the Nigerias and Pakistans of the world, that doesn’t seem to be what’s going on.

Here’s a quick graph I pulled together using the new FP/Fund for Peace data that shows this divide between economic and political governance for failed middle income states. The graph shows the average score for failed middle income states compared to failed low income states for a selection of the indicators used to measure state capacity. The first two columns are the indicators which best cover a state’s ability to deliver on bread and butter economic issues; the Poverty and Economic Performance category includes variables such as unemployment, GDP growth, inflation, and government debt, while the Provision of Public Services category includes infrastructure, energy reliability, education, and policing. As can be seen, in these two categories the failed middle income states do considerably better than the failed low income states (a lower score on the index is an improvement in governance – details on the indicators can be found here [PDF]).

What’s really interesting, though, is that despite their ability to deliver economic growth and provide the public services necessary for a functioning economy, for these middle income countries economic success is not translating into improved political outcomes. Across the four indicators that most closely measure a state’s political stability and competence, the failed middle income countries do just as badly – indeed a little bit worse – than the failed low income countries. While their economies are relatively strong, these 12 states have very low state legitimacy (which includes democracy, corruption, political participation, and government effectiveness), fail to protect human rights and the rule of law (including press freedom, civil liberties, and political freedoms), lack a monopoly on the legitimate use of force (including internal conflict, military coups, riots, and protests), and have highly factionalized elites (including power struggles, flawed elections, and defectors).

Understanding just what’s going on in these failed middle income countries is an important question in contemporary political economy, and it’s something that I’ll be researching more closely with a colleague over this summer; look out for a new paper on these issues later in the year…

This post also appears on Politics in Spires, the joint Oxford/Cambridge politics and international relations blog.

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