Resource Flows to Fragile and Conflict-Affected States

194 Pages·2010·6.524 MB·English

by  OECD

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Conflict and Fragility lic
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Resource Flows to Fragile d
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Fragile states lag far behind meeting the Millennium Development Goals (MDGs) by 2015, representing and Conflict-Affected
75% of the MDG deficit. Fragile states already lacked the institutional strength to adequately respond
to both financial and environmental shocks. The effects of three consecutive and inter-related
States
shocks – food, fuel and the secondary effects of the financial crisis – risk reversing progress
achieved by some post-conflict states, and further entrenching insecurity in others.
Although official development assistance to fragile states is growing in real terms, it is increasingly
concentrated, and half of fragile states face the prospects of declining aid. There is a need to
maintain aid levels and meet aid pledges, but also to improve the quality of support to fragile states.
This report serves as a tool to better monitor the levels, timing and composition of resource flows
to fragile states, and presents salient facts on aid flows to fragile states, the impact on fragile states
of the three crises and the need for a whole-of-government response.
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Please cite this publication as: S
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OECD (2010), Resource Flows to Fragile and Conflict-Affected States, OECD Publishing. t
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http://dx.doi.org/10.1787/9789264092198-en s
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43 2010 16 1 E
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Conflict and Fragility
Resource Flows to Fragile
and Conflict-Affected
States
This work is published on the responsibility of the Secretary-General of the OECD. The
opinions expressed and arguments employed herein do not necessarily reflect the official
views of the Organisation or of the governments of its member countries.
Please cite this publication as:
OECD (2010), Resource Flows to Fragile and Conflict-Affected States, OECD Publishing.
http://dx.doi.org/10.1787/9789264092198-en
ISBN 978-92-64-09219-8 (PDF)
Series/Periodical: Conflict and Fragility
ISSN 2074-3637 (online)
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FoRewoRd – 3
Foreword
the deadline for meeting targets set by the Millennium development goals is now only
five years away. during the first decade of the new millennium, this collaborative effort by
the world’s countries has created progress in development in many areas and many nations.
However, one group of countries is being left behind. about 43 countries – or about one third
of all developing countries – can be considered as fragile states, and most of them are off-track
meeting these goals. so, what do we know about development effectiveness in these fragile
states? what should we know? this report tells the important story behind the numbers.
the challenges for the women, men, girls and boys in these countries are intercon-
nected: poverty and violence feeding each other; lack of employment and social inclusion;
state fragility, insufficient security and basic social services for citizens; demographic
pressures and environmental degradation. these situations do not develop in isolation.
local and national development is affected by and influences regional and global trends.
Furthermore, as this report underlines, these vulnerable countries have not been spared the
negative effects of the financial crisis.
an analysis of resources flowing in, and out of, fragile states – aid, peacekeeping expen-
ditures, foreign direct investment, remittances and trade – is essential to place these different
dimensions into context: what is the relative importance of aid compared to other flows?
what are their respective developmental impacts? are there correlations between these dif-
ferent flows? an analysis of aid flows is needed to monitor whether resource allocation can
be improved: is aid concentrated on a handful of “donor darlings” at the expense of “aid
orphans? can we say that some countries are under-aided, and in relation to what? How vola-
tile is aid and can predictability be improved?
Resource Flows to Fragile and Conflict-Affected States 2010 addresses some of these ques-
tions by providing policy makers and country offices with data on the levels, timing and com-
position of aid and other resource flows to fragile states. the 2010 annual Report, in particular,
highlights the current fallout facing fragile states in the wake of the economic crisis.
Policy relevant data is key for informed decision making. it is now time to put the spot-
light on the consequences of this data, ensuring adequate efforts to improve fragile states’
steady progress towards the Millennium development goals. it is a collective responsibility.
Henrik Hammargren
director – department for Human security
swedish international development cooperation agency (sida)
ResouRce Flows to FRagile and conFlict-aFFected states 2010 – © oecd 2010

acknowledgMents – 5
Acknowledgements
this annual report was prepared by development initiatives and the secretariat of
the oecd dac international network on conflict and Fragility (incaF). the work was
undertaken by a team, including Juana de catheu (incaF, co-ordination of the report),
daniel coppard (development initiatives), sarah cramer (incaF), tasneem Mowjee
(development initiatives) Rachel scott (development initiatives), Rob tew (development
initiatives), Maria Zandt (incaF) and asma Zubari (development initiatives).
the team would like to thank members of the incaF task team on Financing and
aid architecture which provided comments on earlier drafts, and particularly Henrik
Hammargren (chair of the task team), elisabet Hedin (sweden), Pierre ewenczyk
(international Monetary Fund), christian lotz (united nations development Program) and
duncan Burrell (world Bank) – as well as Yasmin ahmad, emily Bosch, Ben dickinson,
Frederik ericsson, aimée nichols, andrew Rogerson, kimberly smith, suzanne steensen,
andrzej suchodolski, and alexandra trzeciak-duval (oecd). the team would also like
to thank isabel Huber for her editorial assistance and Peter Vogelpoel for formatting the
publication.
ResouRce Flows to FRagile and conFlict-aFFected states 2010 – © oecd 2010

taBle oF contents – 7
Table of contents
Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Introduction. Why fragile states matter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Part I. The impact of the global financial crisis on fragile states and the response
Chapter 1. Impacts of the crisis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
direct impact on fragile states: variations across countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
secondary impacts on economic and human development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
implications for fragility, security and political stability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Chapter 2. Responses to the global crisis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
current responses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
looking forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Part II. Aid flows to fragile states: disappointing projections in times of need
Chapter 3. Trends in official development assistance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
official development assistance flows to fragile states. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Chapter 4. Aid effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Managing and spending aid resources, volatility and predictability. . . . . . . . . . . . . . . . . . . . . . . . . . .64
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Chapter 5. OECD DAC member presence, concentration and fragmentation. . . . . . . . . . . . . . . . . .71
a challenge for fragile states . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
country-level fragmentation and concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
sector fragmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80
Chapter 6. ODA and non-ODA funds for security, statebuilding and peacekeeping . . . . . . . . . . . .81
ResouRce Flows to FRagile and conFlict-aFFected states 2010 – © oecd 2010
8 – taBle oF contents
oda funds for security, peacebuilding and statebuilding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
non-oda for security-related activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
combining oda and non-oda funds to address security needs. . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
sequencing of aid to post-conflict countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91
challenges to providing aid to post-conflict countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
Part III. The need for a whole-of-government response
Chapter 7. South-South co-operation, trade, investment and finance . . . . . . . . . . . . . . . . . . . . . . . 103
a changing landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104
the wider context: developments in south-south investment, trade and finance. . . . . . . . . . . . . . . .104
growing volumes of development co-operation beyond the dac membership group. . . . . . . . . . . .106
looking forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
assistance to fragile states. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
development partners providing humanitarian assistance beyond the dac . . . . . . . . . . . . . . . . . . .108
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Chapter 8. Global funds and foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
global funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124
Chapter 9. Private resource flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125
Foreign direct investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126
exports and imports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129
Remittances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
illicit flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Chapter 10. Domestic revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
trends in domestic revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Annex A. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
gaps and constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Related initiatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Annex B. Statistical annex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Annex C. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Figures
Figure 0.1 Fragile states most off-track in relation to Mdgs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Figure 1.1 Remittances to african fragile states have been hit particularly hard . . . . . . . . . . . . . . . . .29
Figure 1.2 Remittances to Pakistan have varied depending on the source. . . . . . . . . . . . . . . . . . . . . . .30
Figure 1.3 economic growth is falling in the majority of african fragile states… . . . . . . . . . . . . . . . .32
Figure 1.4 …and the majority of fragile states outside of africa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Figure 3.1 net oecd dac oda (excluding debt relief) to fragile states, 1990 to 2008 . . . . . . . . . . .51
Figure 3.2 Highly concentrated aid to fragile states in 2008, by country . . . . . . . . . . . . . . . . . . . . . . .52
ResouRce Flows to FRagile and conFlict-aFFected states 2010 – © oecd 2010