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The Economy in Fragile States

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State Fragility, Business, and Economic Performance

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Abstract

State fragility causes severe development challenges due to weak institutional capacity, poor governance, conflict, and political instability. When states fail, population is displaced, human capital is depleted, and the nation’s aggregate production and per capita incomes decline. For example, while GDP growth in low-income countries averaged 2.35% (2018–2021), fragile states registered a mere 0.8% during the same period. In the context of many African countries, fragility and conflict have been a major impediment to reducing poverty. The probability of being poor largely depends on whether you are born in a fragile state or not. By 2030, while 78% of non-fragile states come close to achieving the goal of ending extreme poverty, only 19% of fragile states are expected to achieve that goal (Baier, Kristensen & Davidsen, Poverty and fragility: Where will the poor live in 2030? In Future development, Brookings, 2021). Increased poverty further elevates the risk of conflict leading to a self-reinforcing trend (fragility trap) that keeps countries away from political stability and any hope of reducing poverty.

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  1. Huizenga School of Business, Nova Southeastern University, Davie, FL, USA

    Belay Seyoum

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Seyoum, B. (2024). The Economy in Fragile States. In: State Fragility, Business, and Economic Performance. Palgrave Studies in Democracy, Innovation, and Entrepreneurship for Growth. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-44776-1_4

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