Lagging Lands, Violent Lands A Framework for Action Rationale SEPTEMBER 2013 Economic development is concentrated in a few places. Only 1.5 percent of the world’s land is home to half of its production. In countries like Japan and France, Tokyo and Paris concentrate over 40 percent and 30 percent of their economic activity in less than 4 percent and 2 percent of the country’s land, respec- tively.1 However, these places have extended the benefits brought by such economic concentration to all regions throughout the country; they have been able to spread high levels of living standards through- out their territories. However, not all places have been equally success- ful in spreading the benefits of concentrated eco- nomic success. Estimates from more than 100 Living Standard Surveys indicate that households in the mental challenges constrain growth in the less popu- most prosperous areas of developing countries, such lated north-eastern part of the country. as Brazil, Bulgaria, Ghana, Indonesia, Morocco, and Sri Lanka, have an average consumption almost 75 Violence4 and economic isolation are closely linked. percent higher than that of similar households in the Violence increases transactions costs, including lagging areas of these countries. In comparison, the through a weakening of institutions and the destruc- disparity is less than 25 percent in developed coun- tion of infrastructure, and thus the economic distance tries such as Canada, Japan, and the United States.2 to markets. Conversely, economic distance increases More worrying is the relative persistence of inequali- the economic stresses on lagging areas (such as high ties between regions. And access to basic services unemployment and, in particular, youth unemploy- between leading and lagging areas has been slower to ment), which in turn increases the risk of violence converge. (including through the emergence of illicit economic activities). Lags in economic and social development Today, spatial disparities persist at national, regional, are thus as much a consequence of violence as factors and local levels in many countries. In Tunisia, 97 per- that contribute to it. cent of households in Greater Tunis have piped water in their dwelling as their main water source, but only For instance, limited opportunities in lagging areas 61 percent of households in the north west and cen- often fuel conflict over scarce resources, further ter west do.3 In Egypt, 67 percent of the country’s exacerbating development challenges. Popular dis- poor are living in a single lagging region—Upper satisfaction over lack of inclusive growth has been Egypt—which accounts for a third of the popula- identified as a central reason for unrest across the tion. Disparities are typically the greatest between MENA region.5 And in Africa, lagging areas like the the densely-populated cities and more disconnected, north-east of Nigeria have been lacking access to distant regions. Kenya’s population is concentrated basic services, are ridden by violence, and face dif- in the south-west and in and around Nairobi, while a ficult climatic conditions. Violent regions have also wide range of political, economic, social, and environ- been less successful in attracting economic activity. This note was prepared by a WBG team including Anton Baare, Johanna Damboeck, Olivia D’aoust, Laura De Brular, Nancy Lozano Gracia, Markus Kostner, Somik V. Lall, and Andrew James Roberts. MAY 2017 LAGGING LANDS, VIOLENT LANDS: A FRAMEWORK FOR ACTION At the same time, growth and income in cities are not homogeneous across different neighborhoods. In Rio de Janeiro, for example, poverty and homicide rates in the favelas are considerably higher than in the rest of the city, and their positive correlation is not acci- dental. Violence can thus create a dangerous vicious cycle that deepens the gap between leading and lagging areas. Violent areas are risky for business to invest, challenging for basic service provision, and unat- tractive for people to move to; they become isolated enclaves with perpetuating disparities and a legacy of physical and psychological trauma6. Further, violence not only poses a barrier to growth in and economic integration of the affected regions, it also has a detri- mental impact on neighboring areas—both within cit- ies and countries and across national borders. divisions can facilitate regional convergence in liv- ing standards. Conversely, however, policies that prevent violence or rebuild local societies and economies after the end • The WDR on Conflict, Security, and Development9 of violence can do much to help these lagging lands underscores the centrality of economic, politi- integrate into a broader network of economic activ- cal, and security stresses, such as those faced ity whilst policies that stimulate economic integration by lagging areas and weak institutional capabili- can ease stresses and strengthen institutions and ties for increasing the risk of violence.10 When thereby reduce the risk of violence. With more than economic density is low (even if the population 60 percent of the world’s poor predicted to live in density is high) and unemployment is high, illicit conflict-affected and lagging areas by 20307, a frame- activities and violence can find fertile ground to work for action is, therefore, urgently needed to fos- flourish. And in places that are distant and discon- ter development in vulnerable locations. nected from markets, enforcing the rule of law is harder for governments with limited reach and strained for resources. When divisions, such as Framework for Action social or political differences, are deep, coopera- tion between communities may be harder, which The World Bank’s World Development Reports on may contribute to economic isolation. This WDR Economic Geography (2009) and Conflict, Security, provides a framework focused on restoring con- and Development (2011) provide policy frameworks fidence and transforming institutions to deliver for addressing development challenges in lagging and citizen security, justice, and jobs. Bringing these violent areas, respectively. dimensions into account for policy design, and understanding the social and political stresses • The World Development Report (WDR) on on lagging areas, can help improve stability and Economic Geography8 provides a framework for reduce disparities. policy action that focuses on economic integra- tion and territorial development based on three Thinking about policy options that support economic dimensions of economic geography: distance, growth while reducing spatial disparities in access density, and division. Supporting higher densities to opportunities and living standards is essential not of economic production, allowing agglomeration only for economic growth and poverty reduction but of labor and capital, and developing lagging urban also for political and social stability. On the one hand, neighborhoods can foster economic growth. concentration of economic mass is inevitable and Ensuring shorter economic and physical distances generally desirable from an efficiency point of view; it between leading and lagging regions through is a sign of good economic performance. Spatial con- policies that ease the flow of capital, labor, goods, centration of economic activity often reflects regional and services can allow people to move to areas specialization and agglomeration levels that foster where opportunities are concentrated and give economies of scales in the production process. On the firms access to larger input and output markets; other hand, persistent spatial disparities in living stan- and in areas where physical, socio-cultural, ethnic, dards can adversely affect national unity and social or other thick borders exist, policies to reduce cohesion, foster political instability, and increase the 2 MAY 2017 risk of conflict. While spatial imbalances in economic nal and internal stresses and weak institutions—can growth are inevitable, disparities in access to opportu- help inform policy makers as to what is the best set nities and living standards are not. of instruments to address such challenges so that economic efficiency and spatial and social inclusion go Bringing together the frameworks of these two World hand in hand. A combined spatial and social lens can Development Reports can help chart a path that help bring all the pieces of the puzzle together and promotes growth and economic clustering, while at provide solutions that go beyond sectors and consider the same time efficiently promoting inclusion, equal coordinated actions in a territory. A common policy opportunities, and security. Improving living stan- framework that draws from spatial information and dards is feasible, when policies acknowledge the chal- recognizes the risk or presence of violence can lead lenges people face, rather than focusing on the places to a better choice of instruments to tackle the chal- by themselves. The evidence suggests that prosper- lenges. ous and peaceful places have worked towards higher densities and integration, which economic forces For example, strategies and instruments that can have transformed into opportunities by bringing peo- help a lagging and violent area that is sparsely popu- ple and firms closer to each other in cities, favoring lated will be different from those that are appropriate productivity and economic growth (WDR, 2009). As for an area with high population densities. In areas income rises and government capacity increases, dis- where poverty rates are high but that are sparsely parities in well-being between rural areas and cities populated, and hence the number of poor is also low, will decrease. a focus on providing basic services to everyone can bring large benefits, and a focus on building local insti- Having achieved economic efficiency alongside spatial tutions and supporting participatory processes can inclusion, prosperous places increase the opportu- reduce the risk of violence. Because densities are low, nity cost of engaging in violence (directly, as people thinking about alternative technologies for service have more to lose; and indirectly as one’s willing- provision that are not dependent on scale economies ness to engage also depends on the participation of for achieving efficiency is critical. Alternative models others). In areas ridden by violence, the provision to deliver services such as health care (including nutri- of basic services proves difficult, and investments tion), sanitation, education, and security in which local even in the most basic infrastructure can go to waste governments work hand-in-hand with communities, because the essence of fragility lies into the weakness non-governmental organizations, and the private sec- of institutions. This can be reflected in high levels of tor to provide services that have the potential to (i) corruption, weak rule of law, and poor government gradually build this capacity within government for effectiveness. By contrast, reducing disparities in liv- directly delivering and/or contracting and (ii) regulate ing standards throughout a territory can help reduce implementation in the interim. In this regard, it is social unrest; when equality of opportunities prevails, essential that the choice of delivery model and the pri- stability follows. The virtuous cycle of citizen security, ority interventions be informed by an understanding justice, and jobs is embedded in that development of the type of violence, the key stresses on the local process, through the strengthening of institutions and society and economy, and the range of stakeholders of social inclusion (WDR, 2011). involved. While the WDR on Economic Geography provides a broad strategy for prioritizing and sequencing policies and investments, the Conflict, Security, and Development WDR provides specific implementation options that are tailored to local circumstances. In essence, while the former provides options on the “what and where of policies and investments”, the latter provides specific “how to” guidance. To advance on the lagging areas agenda, it is para- mount to recognize that the heterogeneity of chal- lenges across territories needs to be met with a het- erogeneity of policy instruments. To leave no area behind, each local challenge needs to be matched with a specific set of instruments. Bringing together dimensions of economic geography—density, dis- tance, and division—alongside FCV challenges—exter- 3 LAGGING LANDS, VIOLENT LANDS: A FRAMEWORK FOR ACTION Instead, for lagging where densities are high, and framework can be the beginning of a conversation; it both the rate and number of poor are large, efforts to can help chart the way for prioritizing and sequencing improve connective infrastructure will also be neces- interventions, such that both efficiency and equity are sary to bring about economic transformation. Linking achieved. This framework can provide a roadmap to lagging areas to markets and reducing physical and bring development to lagging areas, and ensure that economic distance between them is key, not only to all lands are safe lands where people can prosper. broaden the sets of opportunities for job seekers and bring firms closer to larger input and output markets, but also to ensure that the rule of law is enforced throughout the territory. Governments, national and local alike, must be able to reach all areas within their administrative boundaries to provide services, includ- ing protection and ensuring safety of its citizens. Interventions that deliver early results (for instance, through labor-intensive public works or community empowerment) can provide short-term space for longer-term policy actions and investments. In some other places, where violence is recurrent and Endnotes divisions are entrenched, area-based interventions that are spatially targeted at places with develop- 1 Kochendorfer-Lucius, Gudrun, and Boris Pleskovic, ment deficiencies and socially targeted at factors eds. 2009. Spatial Disparities and Development Policy. that elevate the risk of violence may be required. This Berlin Workshop Series 2009. Washington, DC: World could be the case in areas in and around country bor- Bank. ders where interventions as well as violence can have impacts that spill beyond national boundaries. In such 2 World Bank. 2009. World Development Report on cases, coordination between administrative areas Reshaping Economic Geography. Washington, DC: at national and regional levels will be key to ensure World Bank. regional stability and exploit possible positive eco- 3 World Bank. 2014. Tunisia Urbanization Review: nomic and social externalities, such as those achieved Reclaiming the Glory of Carthage. Washington, DC: by coordination of service provision or transport infra- World Bank. structure investments. And within cities, relative spa- tial and social exclusion can create deep divisions that 4 For the purposes of this note, the term violence can lead to violence. Targeted investments that are includes both interpersonal and political violence. based on evidence, address multiple stress factors, combine different institutions, and involve communi- 5 World Bank, 2015 ‘MENA economic monitor: ties are proven to have an important impact on local Inequality, Uprisings, and Conflict in the Arab World’, neighborhoods that can help dissipate invisible bor- Washington DC, World Bank Group. ders in the long run and improve the security of the city as a whole. 6 Blattman, Christopher, and Edward Miguel. 2010. Civil war. Journal of Economic literature 48(1), pp. This note has outlined a policy framework for priori- 3-57. tizing interventions in lagging and violent areas that can be used to engage stakeholders, highlight the 7 OECD. States of Fragility 2016, p. 6. development benefits of inclusive and integrated 8 World Bank. 2009. World Development Report action, and create momentum towards a global effort 2009: Reshaping Economic Geography. Washington, to move forward on this agenda. For the World Bank DC: World Bank. Group, attaining its corporate priorities of ending extreme poverty and increasing shared prosperity 9 World Bank. 2011. World Development Report: will require enhanced capabilities through analytical Conflict, Security, and Development. Washington, DC: and operational efforts. But, this cannot be achieved World Bank. alone. There is an urgent need to develop a broad agreement across a multitude of stakeholders— 10 The World Development Report 2017 on including other national and local governments, local Governance and the Law reinforced the importance of communities, development partners, and others. This institutions to prevent violence. The views expressed in this note are those of the authors and does not necessarily reflect the views of the World Bank Group. 4