Monday, June 24, 2013

Sri Lanka moves up one place on Failed state index

Apparently,  Sri Lanka’s ranking among failed states has deteriorated, based on the findings published in the annual Foreign Policy and Fund of Peace report. The report puts Sri Lanka at 28th position as compared to 29 in the 2012 report.

The ranking is prepared by the Fund for Peace, an NGO (Wikipedia has more details).

A change in one place is probably not very significant but it does place us in pretty poor company. The listing and weights used are here

The Foreign Policy site lists 10 key reasons why they believe countries fall apart. Many are obviously not applicable to Sri Lanka but some definitely are.

The preamble to the list starts of by saying

Some countries fail spectacularly, with a total collapse of all state institutions, as in Afghanistan after the Soviet withdrawal and the hanging of President Mohammad Najibullah from a lamppost, or during the decade-long civil war in Sierra Leone, where the government ceased to exist altogether.
Most countries that fall apart, however, do so not with a bang but with a whimper. They fail not in an explosion of war and violence but by being utterly unable to take advantage of their society's huge potential for growth, condemning their citizens to a lifetime of poverty. This type of slow, grinding failure leaves many countries in sub-Saharan Africa, Asia, and Latin America with living standards far, far below those in the West.
  Which is fair enough.

Their list of top 10 reasons why states collapse however is a bit strange. Most are not really central to the collapse, some seem to describe the end results (eg no law and order, weak central state, poor public services) as causes. A couple of points are important and I've analysed them below:

1. Lack of property rights
North Korea's economic institutions make it almost impossible for people to own property; the state owns everything, including nearly all land and capital. 

Property rights are very important, they are the cornerstone of capitalism but not many countries are in the state of North Korea. In Sri Lanka property rights may exist on paper but with the courts corrupted enforcing rights is difficult. If the opponent of the landlord happens to be the state or one of its cronies the likelihood of a fair hearing is virtually nil.

Expropriation of property, by the state via dubious bills and by cronies through coercion and fraud are ever present dangers.

Now do the lack of property rights contribute to the failure of the state? It will certainly have long term adverse impact on business and investment affecting job creation and tax revenues. May be it is a case of the state starving itself to death?

It is important, but can it be considered the most important? Probably not, in my opinion.

4. Egypt: The big men get greedy
When elites control an economy, they often use their power to create monopolies and block the entry of new people and firms. This was exactly how Egypt worked for three decades under Hosni Mubarak. The government and military owned vast swaths of the economy -- by some estimates, as much as 40 percent. Even when they did "liberalize," they privatized large parts of the economy right into the hands of Mubarak's friends and those of his son Gamal. Big businessmen close to the regime, such as Ahmed Ezz (iron and steel), the Sawiris family (multimedia, beverages, and telecommunications), and Mohamed Nosseir (beverages and telecommunications) received not only protection from the state but also government contracts and large bank loans without needing to put up collateral.

I think this is true and describes Sri Lanka's kleptocratic rulers perfectly.

In my opinion the single most important reason world be decline of the rule of law. As it detriorates the state will progressively pass through stages of uncertainty, chaos and finally anarchy.

1 comment:

sbarrkum said...

Pretty impressive when you consider the analysis gives Saudi Arabia (102) Libya (54).

Surprised the study was not able to pick indices that would have given Iraq and Afghanistan higher rank.

That was sarcasm.