State-building

When studying the development of European states, Charles Tilly identified that European countries engaged in four activities:[12]

1. war making – eliminating or neutralizing their own rivals
2. state making – eliminating or neutralizing their rivals inside their own territory
3. protection – eliminating or neutralizing the enemies of their clients
4. extraction – acquiring the means of carrying out the first three activities.

For Tilly, these activities are interdependent and rely in the state's ability to monopolize violence. Before the consolidation of European states, kings relied on their lords’ troops to emerge victorious from war, setting the final boundaries of their territories after years of campaigns. Still, these lords and their private armies could become potential threats to the king's power during peacetime. Originally, structures were created to facilitate extraction from the king's subordinates in exchange for protection (from their enemies and from the state), covering the expenses of war campaigns. However, extraction also economically strengthened the states, allowing them to expand their hold over the use violence.[13]

Out of these four activities, war making was the main stimulus to increasing the level of taxation, thus increasing the capacity of the state to extract resources otherwise known as fiscal capacity.[12] The increased capacity of the state to extract taxes from its citizens while facing external threats prompted Jeffrey Herbst to propose allowing failed states to dissolve or engage in war to re-create the process endured by European countries.[14] The process of extraction in exchange for protection was further argued by economic historian Frederic Lane. Lane argued that "governments are in the business of selling protection... whether people want it or not".[15] Furthermore, Lane argued that a monopoly was best equipped to produce and control violence. This, he argued, was due to the fact that competition within a monopoly raised costs, and that producing violence renders larger economies of scale.[15] Although the logic was consistent with the predatory theory of the state in early modern Europe,[16] Herbst's point of view was criticized by several scholars including Richard Joseph who were concerned that the application of predatory theory was an excessive approach of Darwinism.[17] Many have disregarded the limited view of this theory and have instead extended it to include strong external threats of any kind. External threats to the state produce stronger institutional capacities to extract resources from the state.[18]

In harnessing this increased capacity, Cameron Thies describes the state as a machine that requires a "driver" that is able to use the increased capacity to expand influence and power of government. The driver can be state personnel, a dominant class, or a charismatic individual. Without these drivers, the political and military machine of the state has no direction to follow and therefore, without this direction, war and the increased resources extracted from war can not be used for growth.[18] On the other hand, internal wars, i.e. civil wars, have a negative effect on extraction of a state. Internal rivals to the state decrease the state's capacity to unify and extract from its citizens. Rivals usually will bargain with the state to lower their tax burden, gain economic or political privileges.[18]

In their paper,[19] Douglass North, John Wallis, and Barry Weingast offer an alternative framework - limited access orders - for understanding the predatory role of the state. In limited access orders, entry is restricted in both economic and political systems to produce rents which benefit the ruling elites. In open access orders, entry is open to all. The logic of the open access state is based in impersonality. Both systems are interdependent and are only stable when both have similar access frameworks, either limited or open. Transitioning from a limited access order to an open access order involves difficult, radical changes based on three "doorstep conditions": 1) rule of law for elites, 2) perpetual life for organizations, and 3) political control of the military. Once all three initial conditions are satisfied, more incremental changes can be made to move the state further in the direction of an open access order.

In his study on countries of Asia, Africa and Latin America, Joel Migdal presented the necessary and sufficient conditions for establishing a strong state.[20] He considered "massive societal dislocation" that weakens old social control and institutions as the necessary condition. Such cases include the Black Death and the Hundred Years' War in Europe,[21] the expansion of world economy into Asia, Africa and Latin America in the 19th century, the combination of war and revolution in China, Korea and Vietnam and mass migration in Taiwan and Israel in the 20th century. Furthermore, he listed the sufficient conditions as follows:

• World historical timing when exogenous political forces were in favor of concentrated social control;
• Existence of military threat from outside or other groups in the country;
• A group of skillful and independent people to build an independent bureaucracy;
• Skillful top leadership that would take advantage of the above conditions.

Governments that have implemented the top-down method present the idea that there is a great external threat that can diminish the capabilities of a state and its citizens. The perceived threat creates an incentive that focuses policy, make elites cooperate, and facilitates the adoption of a nationalistic ideology. In an authoritarian government, political, military, and ideological power is concentrated to be conducive to policy continuation. The bureaucracies implemented are well trained, well paid, and highly competitive in recruitment and promotion.[43] Economically successful states in East Asia have taken on programs to create infrastructure, subsidize the farming sector, provide credit, support spending on targeted research, and invest in health and education. However, most governments are non-developmental and unstable. Furthermore, even when countries have tried to pursue authoritarian strategies that have worked, specifically Brazil, a divided military, regional oligarchs in power, and vast disparities in inequality delegitimized the regime.[44]

A democratic regime engages citizens more actively than a top-down government. It respects the right of citizen to contest policies. Successful democracies developed political capacities by nurturing active citizenship, maintaining electoral competitiveness that gave value to the votes of the poor, fostered political parties that were strongly oriented towards equality, and had strong party-social movement ties.

Good governance is a very broadly used term for successful ways a government can create public institutions that protect people's rights. There has been a shift in good governance ideals, and as Kahn[45] states, "The dominant 'good governance' paradigm identifies a series of capabilities that, it argues are necessary governance capabilities for a market-friendly state. These include, in particular, the capabilities to protect stable property rights, enforce the rule of law, effectively implement anti-corruption policies and achieve government accountability." This good governance paradigm is a market-enhancing process which emerged in the 1990s. This approach involves enforcing the rule of law, creating stronger property rights, and reducing corruption. By focusing on improving these three traits, a country can improve its market efficiency. There is a theoretical cycle of market failure[45] which explains how a lack of property rights and strong corruption, among other problems, leads to market failure:

• The cycle starts with economic stagnation, which can enhance and expose the inefficiencies of a weak government and rule of law that cannot effectively respond to the problem.
• Because a government is unaccountable or weak, small interest groups can use the government for their specific interests, resulting in rent seeking and corruption.
• Corruption and rent seeking from interest groups will lead to weak property rights that prevent citizens and smaller businesses from the assurance that their property is safe under national law. Also the corruption will result in welfare-reducing interventions.
• These weak property rights and welfare-reducing interventions lead to high transaction cost markets.
• High transaction cost markets lead back to economic stagnation.

While it is understood that improving rule of law and reducing corruption are important methods to increasing the stability and legitimacy of a government, it is not certain whether this approach is a good basis for a state building approach. Researchers[45] have looked at this approach by measuring property rights, regulatory quality, corruption, and voice and accountability. There was little correlation found between increasing property rights and growth rates per capita GDP.[11] Similarly, there is disagreement among development researchers as to whether it is more beneficial to promote comprehensive set of reforms or to promote a minimal set of necessary reforms in contexts of poor institutionalization. Proponents of the former approach have put forward the concept of "good enough governance".[46]

In response to the unsuccessful attempts to strengthen government administrations, developing countries began to adopt market-oriented managerial reforms under the pressure of the IMF and the World Bank. New Public Management approach first emerged in New Zealand and the United Kingdom in the 1980s.[11] New Public management uses market like reforms within the public sector to provide the government with the necessary power to implement a development plan on the economy while also using competitive market-based techniques to enhance public sector production. It changed public sector employment practices from career tenure positions towards limited-term contracts for senior staff, locally determined pay, and performance-related pay.[11] Secondly, the provision of government services shifted towards contracts, franchising, vouchers, and user charges in an effort to promote efficiency in service provision to citizens.[11]

In this type of government, large bureaucracies within a ministry (the principal) no longer maintain their hierarchical structure but rather are composed of operational arms of ministries that perform the role of an individual agent. The strategy has been more prominent in liberal market-driven policy regimes like New Zealand, United Kingdom, and the United States. Continental Europe has been more resistant to implementing this type of policy. In developing countries, the implementation of these types of infrastructure has been difficult because the markets for the delivery of services are imperfect and increase the danger of regulatory capture by companies. For successful implementation, governments must have the infrastructure to measure reliable performance indicators and the capacity to regulate the behavior of private providers.[11]

In reference to state building approaches decentralization is beneficial because "It seeks to reduce rent-seeking behavior and inefficient resource allocation associated with centralized power by dispersing such power to lower levels of government, where the poor are likely to exercise influence and a variety of actors may participate in the provision of services".[47]

Limitations to decentralization are the reduction of the meritocratic basis can limit the state's capacity to serve citizens, limited control of the fiscal funds at the local level can prevent effectiveness, and substantial inequalities in fiscal capacity among different regions can create ineffective redistribution of resources. Therefore, for these policies to work, there must be coordination efforts to ensure that growth-oriented and redistributive strategies initiated at the central government are implemented regionally. Furthermore, government elites must be in favor of low-income groups and grass root groups should be able to engage with local authorities during policy making.[11]

Kosovo has gone through extensive state building by the United Nations Interim Administration Mission in Kosovo (UNMIK), that assumed all executive, legislative and judicial powers in 1999, aiming to restore order, stability and peace in the turbulent region. This is a unique example of state-building that is directly administered by external actors, the effectiveness of which is to this date contested. The Minister of Foreign Affairs of the Republic of Kosovo, Enver Hoxhaj claimed Kosovo is the most successful state-building example in the region,[48] as its transition from war and genocide, to peace and progress has been remarkable. The developmental progress of Kosovo is apparent in its new institutional framework, that although initially centrally planned and administered by the UNMIK, has gradually transferred competencies to relevant national bodies and relevant institutions. The 2012 Report of the Secretary-General on the UNMIK claims of 'encouraging signals of commitment by the parties to engaging with one another through peaceful means and dialogue to resolve their differences'.[49] Yet Kosovo remains a "black hole"[50] in Europe, being a semi-consolidated authoritarian regime, noting high levels of corruption, crime and unemployment, casting doubts over the extent to which state-building was successful. Arguably, the state is still overly dependent on international aid and external assistance for its economy, part of which is still linked to networks of the old war economy.[51]

Latin America experienced a period of rapid economic growth and political stability in the late-19th century, following independence and subsequent decades of decline caused by violence, reduced state-capacity, and fiscal fragmentation. This trajectory is markedly successful relative to other post-conflict societies at the time. Differences can be attributed to the demography of Latin America compared to other newly independent European colonies, the massive European presence in Latin America, the collapse of indigenous institutions, and the death of indigenous populations - unparalleled at the time. Latin Americans also enacted a number of liberal public policies swiftly and effectively, such as abolition of slavery (Saint-Domingue in 1793, Haiti in 1804, New Spain in 1813, Peru in 1854, Brazil in 1888), socializing property rights over land, and eliminating public monopolies, which fostered long-term stability that facilitated economic growth and established a new political economy for these new nations. The growth and stability seen in Latin America, however, did come at a high social cost in the form of social inequality that continued into the 21st century.[52]

In the 21st century it became economically and politically difficult for Latin American countries to increase revenues, which led states to turn to debt for the necessary resources to pay for war. As a result, Latin American countries did not establish the same tax basis that their European counterparts did. This can be explained by the predatory theory. Studies on the extraction of tax revenues have demonstrated that both external and internal rivals affect the ability of a state to develop and extract resources from its citizens. Interstate rivals had a positive effect on the state's capacity to extract resources while intrastate rivals had a negative effect on state building.[18]

Tilly's theory that external threats strengthen the state's capacity to extract taxes from its citizens can apply to developing countries in Africa.[53] The presence of both external state rivals and internal ethnic rivals prompted states to increase their extraction of taxes from citizens while internal political rivals failed to affect the extraction of taxes. The leaders in power try to maintain their position by catering to the majority ethnic group and by increasing taxes to gain the resources to diminish threats from minority ethnic groups. Thus the presence of internal ethnic rivals creates the capacity to significantly increase the tax ratio.

Drawing on Charles Tilly's theory of European state formation, a number of scholars have suggested that in focusing on internal rivalries, rather than challenging colonial borders, rulers were "less likely to see their economies as a resource to be nurtured than as an object of periodic plunder—the analogy to Olson's (1993) roving bandits should be clear" (Thies, 2004: 58). In the absence of external threats, rulers thus had no impetus to replicate the patterns described by Tilly—war making, coercion, resource extraction—that had proven crucial to the process of centralization of power in the states of Europe.

For example, in States and Power in Africa (2000), Jeffrey Herbst explains that "domestic security threats, of the type African countries face so often, may force the state to increase revenue; however, civil conflicts result in fragmentation and considerable hostility among different segments of the population", undermining the state's ability to rally the population's support for the "national project" (2000: 126).[54] In a later article, Herbst argues that war in Europe lead to strong states and that without war African states will remain weak.[55] In Europe, external threats allowed states to tax, increase taxation, and forge a national identity. Additionally, the states that were invaded and taken over (such as Poland-Lithuania or Ireland) by stronger countries were militarily and politically weak. African states are poor, have weak governments, and are fragmented on ethnic or regional lines. According to theory, these weak African states should be susceptible to external threats, but this is not the case. In Africa, Herbst notes, there are rarely conflicts between states, and if there are, war does not threaten the existence of the state. For example, in the 1979 Uganda-Tanzania War, Tanzania invaded Uganda to overthrow Idi Amin, but after the Tanzanians had removed Amin, they left the country. Although African states do not experience widespread interstate war, Herbst argues they need it to reform the tax structure and to build a national identity. Herbst concludes that war in Africa is likely to occur when African leaders realize that their economic reforms and efforts to build a national identity do not work and in desperation will start wars to build the states that their countries need.[55] James Robinson disagrees with Herbst in the grade of influence of war on state-building, stating that European colonization and European influences in the continent impacted more deeply the creation of institutions, and therefore, states in Africa.[56]

As of 2017 the provision of public services, another dimension of state-building, which includes the management of human capital within the realm of service along with the delivery of public services, remains another major challenge for post-conflict African nations. Academics have built models of the political economy in post-conflict African societies to understand the trade-off between the capability, delivery, and stability of public-service administration, and policies which result in weak civil service rooted in the nations' legacies of conflict.[57]

Several researchers have emphasized that the internal violence seen in Africa was characteristic for early modern European politics and that this type of structure may resolve to produce an increased level of political order.[16] A number of scholars have criticized this claim for its "excessively Darwinian", overly deterministic and Euro-centric understanding of the process of state-formation (Thies, 2004: 69, see also Joseph, 1997).

The international intervention which culminated in renewed conflict in South Sudan is cited as an example of a flawed application of international state-building.[58] On July 9, 2011, with unilateral support from the United Nations Security Council and the Inter-Governmental Authority on Development (IGAD), the nation of South Sudan was officially recognized as an independent Sovereign, forged by an alliance of rebel groups.[59] The process of building this state, however, had begun in 2005 with the proclamation of the Comprehensive Peace Agreement (CPA), a militarist agreement forged among warlords to establish a military dictatorship in South Sudan. The United States, Britain, Norway, and the IGAD conceptualized and facilitated the process as the solution to the ongoing Second Sudanese Civil War of 1983 to 2005.[60] This agreement rested on an assumption that the terms of a peace agreement should be determined solely by military leaders. Later, in 2010, an attempt was made to include political leaders in the state-building process through the All South Sudanese Political Parties convention, which ultimately resolved to create a transitional government with representation from all major political factions, with a goal of hosting free and fair elections within two years of independence.[61] However, the transitional government never kept these terms, and South Sudan subsequently devolved into fierce ethnic conflict and civil war. Mahmood Mamdani asserts that this renewed violence was caused by the blatant disregard that South Sudan's rulers have shown for the peace treaties, due to a perception of reassurance through unconditional international support. The treaties have in effect become, as Jeffrey Herbst describes, unenforceable contracts.[62]

Mamdani and other scholars have called for the establishment of a new transitional process, through a neotrusteeship facilitated by the African Union (AU). They cite the successful resolution of the Gambian post-election crisis[63] to assert that the AU is the only international institution with the credibility and regional representation required to effectively manage the crisis. They assert that this new transition should exclude all participants from the first failed government, should be jointly mandated by the AU and the UN, and should be funded by the United States, Norway, and Britain as an admission of their past failures.[60]

The Palestine Liberation Organization (PLO) claims sovereignty over the Palestinian Territories whose legal statehood is widely recognized (though not by some major global powers), as well as representative status over the Palestinian people, a claim that is universally recognized. However, it does not have sole jurisdiction over the areas it claims. In addition, many of those it aims to represent currently reside elsewhere, most notably in Arab countries such as Jordan, Lebanon, and Syria. Nonetheless, the PLO and other Palestinian organisations have historically made great efforts to install institutions of a type commonly associated with states in the Palestinian territories - as well as in countries with large numbers of Palestinian residents. Examples include:

• Jordan after the Six-Day War (June 1967), where the installation of parallel structures of power and mechanisms for taxation and education led to largely independent Palestinian enclaves which formed a threat to the power and legitimacy of the Hashemite monarchy[64]
• Lebanon, where a similar process exacerbated ethnic and religious tensions[64]

Despite the break-down of the Oslo process of 1993-2000 and the ongoing construction of Israeli settlements (1967 to present), the Palestinian National Authority continues to engage in state-building activities in its territories and has referred to the "State of Palestine" in official documents since 2013. In 2003 the United Nations Security Council passed UN Resolution 1515, calling for the "establishment of an independent, democratic and viable Palestinian state". Despite this official acknowledgement of the legitimacy of PNA state-building by the international community, a 2011 report prepared by the London-based Overseas Development Institute found international assistance to have been "sporadic and fragmented".[65] Besides the lack of consistent outside support, the report identified key challenges to Palestinian state-building at the international level, including the lack of horizon on "final status" negotiations, failed peace negotiations, the tightening of the occupation, and the weak economic base, in addition to profound challenges at the domestic level, including:

• a lack of an internal political settlement
• weak linkages between ruling authorities and society at large
• weakened social cohesion
• gender inequality
• weak civil-society
• lack of capacity of formal PNA institutions
• (perceived) securitization of authority across the occupied Palestinian territory[65]

A number of scholars have questioned whether the Palestinian Authority was ever in a position to build a viable state. Edward Said, Neve Gordon and Sara Roy – among others – have argued that the PNA was designed as an "occupation subcontractor", only strengthening the power asymmetries between occupier and occupied.[66] Another strand of analysis, associated with Jamil Hilal and Mushtaq Khan (2004), portrays the PNA as a "transitional client quasi-state", stuck in a situation where core functions of the state remain in the hands of the Israeli state. They identify structural issues within the Oslo process and disunity and corruption prevalent among the Palestinian elite as key reasons for the failure of Palestinian state-building efforts.

Based on kernels of tribalism, fundamentalist religious ideology (Wahhabist Islam) and monarchical dynastic control,[67] Saudi Arabia formed as a 20th-century state with the support of tax revenues and military development.[68]