What makes a country at risk of instability? This paper from the Prime Minister’s Strategy Unit looks at factors driving political, economic and social instability. These include country capacity, risk factors, external stabilising factors and the feedback loop of instability into risk factors. Evidence of instability reveals the importance of elites, institutions and natural resources. The number and intensity of conflicts can and has been reduced through short-term preventative measures, long-term economic development and the creation of democratic political institutions.
Describing a country or region as unstable suggests the presence of political, economic, or social upheaval. A simple framework can be used to structure analysis of stability. This focuses attention on risk factors and the vicious cycle of conflict eroding country capacity and thus reducing stability. In order to meet the challenges posed by countries at risk of instability, we need to understand what drives political instability, poor economic performance and violent conflict.
- Long term factors like trade and geography and medium-term factors such as political and economic institutions determine economic success and failure. Political and economic institutions are shaped by the actions of elites.
- Countries undergoing political transitions face a high risk of instability. Constraints on ruling elites and the degree of public participation in polity are important in determining political stability. Bureaucracies can help preserve stability.
- Economic development often precedes democracy but is not sufficient for it to take root. This is partly due to natural resources. Petrowealth, for example, can retard democratisation.
- Poverty, fragile political institutions and recent violent conflict are all associated with intra-state violence. Elites draw on group identities and grievances to further their interests. Civil conflict breeds its own conditions by criminalising the economy and weakening institutions that can mediate social conflict.
- Economic growth requires good quality political and economic institutions. Institutions set the incentives for elites and constrain their behaviour so they act in the interest of the majority.
- ‘Point source’ natural resources (e.g. oil and minerals) can contribute to economic stagnation or decline. While natural resources can have a positive effect on growth, this is often outweighed by indirect misallocation effects and indirect political economy effects.
Lessons emerge for conflict prevention and peacebuilding:
- Instability depends on a complex chain of events and interactions. But assessment and monitoring of risk factors enables early response. Increasing a country’s capacity to manage and adapt to change is at the centre of creating stability.
- In the short term, conflicts can be shortened and reduced in intensity through preventative diplomacy, mediation, peacekeeping, and cutting financial flows to protagonists.
- In the long run, a twin-track approach of economic development and the creation of democratic political institutions is best for conflict prevention. While good policies are important for growth, long-term changes in income levels are not achievable without strong political and economic institutions.
- When faced with resource allocation decisions, the high risk of civil war in post-conflict countries justifies a focus on preventing conflicts recurring. While capacity is low in these situations, there is a greater opportunity to reshape institutions.
- Donors have sometimes proffered misleading advice by being inflexible over the forms of institutional reform they will support. Donors may also have induced instability through the timing of their support.
