Analytical Corner: Fragile States and Corruption—Towards an Enhanced International Financial Institutions Engagement


Location: Cedar Hall, HQ1-1-660


Fragile states sit at the heart of the development discourse and are the key target group of most IFIs. The Fund’s new FCS Strategy adopted this year reflects a broad reassessment on how to engage in fragile states. This reassessment is driven by recognition that the approaches over the past two decades have not delivered as expected, as the number of fragile states is worsening, and countries steadily fail to escape that condition. The rapport between fragility, governance and corruption are an important feature of this reassessment, supported by IMF research. This research which is in part based on actual cases from Fund work, brings out three issues. (i) Corruption is central to fragility. That corruption critically affects the core functions of the state, i.e. its authority (to control violence), capacity (to deliver basic services) and legitimacy (secure popular consent). (ii) Corruption in fragile states is part of a governance equilibrium: corruption in state functions and sectors is interlinked and part of trade-offs. As a result, corruption in fragile states cannot be tackled on an institution-by-institution, or even sector-by-sector basis. (iii) Combating corruption therefore calls for a broader approach aimed at changing behavioral patterns through structural adjustments and incentives, with criminalization as a supportive factor. This area is in full development amongst development partners and within the Fund, and this Analytical Corner will provide an informed perspective on these questions based on recent publications.

Sebastiaan Pompe