What are the Preconditions for Turnarounds in Failing States?

Abstract

This paper analyzes the preconditions for sustained policy turnarounds in failing states. Our dependent variable is the probability of the commencement of a turnaround that eventually becomes both sustained and substantial. We focus upon the explanatory variables of resource rents, education, and aid, distinguishing between finance and technical assistance. Overall, we find that these variables have significant and large effects on the duration of state failure. Appropriate donor intervention can radically shorten state failure, whereas additional finance, whether from aid or resource rents, has the opposite effect.

Keywords:

• failing states
• reform
• aid

Notes

Because it has been used to allocate the Bank's concessional lending (IDA), the details of the ratings have been kept confidential from the countries concerned, although it has been published in quintiles for some years. We understand that the Bank's Board has decided in 2006 to release the detailed information.

∗Sustained turnarounds included in our baseline regression.

∗∗∗significant at 1%

∗∗significant at 5%

∗significant at 10%.

Countries included in the sample are listed in Table 1.

∗∗∗significant at 1%

∗∗significant at 5%

∗significant at 10%.

∗∗∗significant at 1%

∗∗significant at 5%

∗significant at 10%.

∗∗∗significant at 1%

∗∗significant at 5%

∗significant at 10%.