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Economic Growth and Rebuilding in Fragile States Amid Crisis: Realistic Options for U.S. Policy

This guide explores the necessary steps for achieving economic growth in post-conflict countries, focusing on the importance of clear goals, sensitivity to the political and social context, and a pragmatic approach. It discusses the trade-offs and priorities involved in fiscal policy, institutions, monetary policy, employment generation, infrastructure, private sector development, and more.

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Economic Growth and Rebuilding in Fragile States Amid Crisis: Realistic Options for U.S. Policy

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  1. Preventing and Rebuilding Failed States Amid Global Economic Crisis: What are Realistic Options for U.S. Policy?Woodrow Wilson International Center for ScholarsWashington, D.C., June 5, 2009 A Guide to Economic Growth in Post-Conflict Countries James T. Smith, Editor for Office of Economic Growth Bureau for Economic Growth, Agriculture, and Trade

  2. Session C: Economic DevelopmentHow Can the Political Economiesof Fragile and Failed States Be Transformed into National Growth Economies? “Toward sound management of the economy and aid”

  3. Main Messages • Economic growth - Critical for success • Reforms and programs need to: • Start right away • Be done differently • Achieve immediate widespread impact • Short-term actions contribute to achieving long-term objectives

  4. Post-Conflict Goals • Re-establish economic governance • Restore legitimacy of government • Boost employment and well-being • Address root economic causes • Stabilize the economy • Position economy to grow rapidly

  5. What’s required for success? • Clear goals • Sensitivity to post-conflict political and social context • Pragmatic, coordinated approach • Host country ownership • Do EG early! • Do EG differently!

  6. How should it be done? • Focus on the basics • Establish priorities • Understand recurring trade-offs • Pay attention to sequencing • Anticipate transition to the long-term

  7. Four Recurring Trade-Offs • Effectiveness vs. Efficiency • Urgency vs. Legitimacy • Short-term vs. Long-term • Window of Opportunity vs. Absorptive Capacity

  8. Trade-Off: Short term vs. Long term FISCAL POLICY AND INSTITUTIONS PRIORITY AND SEQUENCING OF ASSISTANCE

  9. II. Best Practices Macroeconomic Management Fiscal Policy and Institutions Monetary Policy and Institutions Employment Generation Infrastructure Private Sector Development Private-Sector Enabling Environment Enterprise Development Agriculture Banking and Finance International Trade and Border Management

  10. Main Messages • Economic growth - Critical for success • Reforms and programs need to: • Start right away • Be done differently • Achieve immediate widespread impact • Short-term actions contribute to achieving long-term objectives

  11. Where to find “A Guide to Economic Growthin Post-Conflict Countries” http://pdf.usaid.gov/pdf_docs/PNADO408.pdf

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