From Voxdev
Building state capacity in fragile states: Evidence from Afghanistan
By Joshua Blumenstock, Michael Callen, Anastasiia Faikina, Stefano Fiorin, Tarek Ghani. and Saipremnath Muthukumaran
The Mobile Salary Payment (MSP) reform in Afghanistan was an ambitious effort to build administrative capacity in one of the world’s most fragile states. Evidence on its impacts sheds light on what helps to improve state performance, and how fragility can impede institutional and economic development.
Poverty and state fragility are increasingly connected: while fragile states comprise just 24% of the global population, they account for 73% of those living in extreme poverty—a figure projected to rise to 86% by 2030 (OECD 2022). It is clear that fragility undermines the development of the types of effective states that enable economic growth. Yet, why fragility hinders state development remains unclear. Our research examines one potential explanation: that extreme fragility, because it implies deep uncertainty about future “rules of the game”, discourages investments in state capacity. Risks of war, state collapse, and institutional upheaval (Fearon and Laitin 2003, Collier 2008, Acemoglu and Robinson 2012) may discourage costly and complex investments in state capacity, such as systems to effectively compensate civil servants, which yield benefits only if the state endures (Besley and Persson 2010, North and Thomas 1973).
Building such administrative capacity – starting from effectively identifying and paying civil servants – is crucial for fragile states transitioning from informal systems to enduring and structured organisations (Besley and Persson 2009, Cantoni et al. 2024). However, this task is especially daunting for states trapped in “fragility traps”, where such investments must be made not only in contested regions but also under the constant threat of collapse. We examine a flagship initiative by the Afghan government to make such an investment. The Mobile Salary Payment (MSP) reform aimed to build basic administrative capacity by leveraging digital technology to modernise the identification and payment of civil servants. This reform began in 2017 and continued until the Taliban's takeover...
Joshua Blumenstock is an Assistant Professor at the UC Berkeley School of Information. His research lies at the intersection of machine learning and empirical economics.
