The paper analyses a contradiction in the liberal approach to post-war statebuilding. The form of the state is seen to aim for the establishment of a centralised maximalist administration when the state's de jure economic policy makes its revenue dependant on market-generated private sector taxes that are either inadequate or its institutions are part of the reconstruction process. This conflation de facto leads to dependency on official development assistance (ODA), mainly administered through exogenous-to-state agencies that undermine the nascent state's bureaucratic development. The paper introduces the concept of deferred revenue regime and argues that dependency on ODA is one empirical symptom of the contradiction in the liberal approach to statebuilding. Using a high-profile recent example in an instrumental case study, Afghanistan, from 2002 to 2021, the paper develops a diachronic sequencing of significant policy decisions to suggest temporal causality between economic management and ODA dependency, relying on primary data and stylised statistics. The findings contribute to post-war statebuilding, institutionalism and the political economy of aid.
Policy Implications
- A synergistic embeddedness of the state in economic resource allocation presents an alternative strategy for material development and revenue generation for post-war states than the predominantly free market-based resource allocation and its fiscal outcome in the form of private sector taxes. The latter is conditional on formal and informal reforms, and extensive time and resources during an interregnum. This interregnum's de jure revenue generation policy in practice leads to a deferred revenue regime, which is typically financed in internationalised statebuilding by foreign aid often seen to undermine the post-war state's institutional development.
- The IFIs and international organisations involved in post-war statebuilding should recognise that success of market-oriented policy in a post-war statebuilding depends on ‘centralised patronage’ managed by the post-war state's politics over resources in its bargain with social groups who own these resources (capital) and can put them to productive uses.
- The post-war state’s integration into the aid system by the international actors is crucial for the state’s embeddedness in economic resource allocation and management.
- Incremental reforms – e.g., sector wide approach to development – could be integrated into the post-war development strategy by the state in coordination with external actors beyond quick fix measures if thinking regarding state non-intervention in economic management changes at the policy level away from debates on ‘how much’ to ‘what kind’ of state intervention aligns with material growth and fiscal independence for the post-war state.
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