Minimalist economic management, deferred revenue regime and aid dependency: Explaining contradictory post‐war statebuilding aims
| Published date | 01 November 2024 |
| Author | Kambaiz Rafi |
| Date | 01 November 2024 |
| DOI | http://doi.org/10.1111/1758-5899.13427 |
Global Policy. 2024;15:869–885.
|
869
wileyonlinelibrary.com/journal/gpol
1 | OUTLINING THE GENEALOGY
OF AID DEPENDENCY IN POST- WAR
STATEBUILDING
Internationalised post- war1 statebuilding is mainly a
phenomenon of the post- Cold War period (Dobbins
etal., 2007). In the mainstream approach to post- war
economic policy, universalist market- oriented policy
principles are often replicated with few contextu al ad-
aptations (Cramer,2006). For instance, the World Bank
has recommended post- war policies to obtain market-
friendly conditions in line with its u sual policy advocacy
in recent decades (World Bank, 1998). Scholarly work
has sometimes provided support, not unproblemati-
cally, to viewing the post- war ‘moment’ as a clean slate
that is well- suited for radical market- oriented good gov-
ernance reforms (see, e.g. Collier & Pradhan, 1994;
Dobbins etal.,2007).
This paper, however, aims to show that a contra-
diction arises in the mainstream approac h to the for-
mal process of post- war statebuilding regarding state
revenue generation. The institutional conditions for
a market- oriented economy require the capac ity of a
relatively efficient central state administration. Mar ket
economy and a minimalist but ‘efficient’ state partly
reflect recent thinking regarding the s tate's role in de-
velopment (Chang,20 02), notably in the scholarship
applying neo- institutionalist thinking (see, for instance,
World Bank,199 7, 2002). However, t he market econo-
my's adoption makes state de jure revenue dependent
on a source (i.e. market- generated private sector taxes)
that takes long periods to realise; its levels are thus
severely inadequate in a post- war country to fun d the
state, and its institutions are often part of the proc ess
of post- war reconstruc tion. This conflation contributes
to dependency on a non- tax ex ternal source, official
RESEARCH ARTICLE
Minimalist economic management, deferred revenue
regime and aid dependency: Explaining contradictory
post- war statebuilding aims
KambaizRa
Received: 29 Janu ary 2024
|
Revised: 5 August 2 024
|
Accepted: 7 Augu st 2024
DO I: 10 .1111/17 58- 589 9.13 427
School of Govern ment and International
Affairs, Durh am University, Durham, UK
Correspondence
Kambaiz Rafi, Sc hool of Government and
International Affairs, Durham University,
Al- Qasimi Build ing, Elvet Hill Rd, Durham
DH1 3TU, UK.
Email: rafikambiz@gmail.com and
kambaiz.rafi@durham.ac.uk
Funding information
Afghanistan Re search Initiative, The
University of C entral Asia; Economic an d
Social Resear ch Council, Grant/Award
Number: ES/X006832/1
Abstract
The paper analyses a contradiction in the lib eral approach to post- war statebuild-
ing. The form of the state is seen to aim for the establishment of a centralis ed
maximalist administration when the state's de jure economic pol icy makes its
revenue dependant on market- generated private sector taxes that are either in-
adequate or its institutions are part of the reco nstruction process. This conflation
de facto leads to dependency on offi cial development assistance (ODA), mainly
administered through exogenous- to- state agencies th at undermine the nascent
state's bureaucratic development. The paper introduces the co ncept of deferred
revenue regime and argues that dependency on ODA is one empirical symptom
of the contradiction in the liberal appro ach to statebuilding. Using a high- profile
recent example in an instrumental case study, Afghanistan, from 2002 to 2021,
the paper develops a diachronic sequencin g of significant policy decisions to
suggest temporal causality bet ween economic management and ODA depend-
ency, relying on primary data and stylised statist ics. The findings contribute to
post- war statebuilding, institutionalism and the political economy of aid.
This is an open ac cess article under t he terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium,
provided the original work is properly cited.
© 2024 The Author(s). Global Policy published by D urham University and Jo hn Wiley & Sons Ltd.
870
|
RAFI
development assistance (ODA),2 typically administered
through bilateral or multilateral development agencies
(e.g. The United Nations, The World Bank, etc.). The
latter function as parallel bureaucracies t hat are not
integral to the formal process of building the po st- war
state and its statutory institutional arrangement (Di
John, 2008). Regarding fiscal policy, the paper aims
to answer how the minimalist conception of the state's
role might lead to the fiscal outcome of a post- war
state, making it vulnerable to failure (Cramer,2006; Di
John,2008).
A growing scholarship has shown the revenue sys-
tem to be central to state- society relati ons and building
state institutional capacity (Bräutigam,2008). The issue
here is not taxation per se but the minimalist form of the
post- war state to achieve it. The paper uses granular
data regarding a high- profile post- war (and later, war-
affected) statebuilding case, Afghanistan 2001–2021,3
that attracted unprecedented human and finan cial
resources for two decades and rapid ly disintegrated
even before the withdrawal of the US- l ed military coa-
lition had ended. The post- war state emerged in a UN-
sponsored internationalised process involving Afghan
stakeholders in late 2001- early 2002. A constitutional
process opted for a presidential system (Rubin, 2004)
and envisioned a centralised maximalist state4 to per-
form a complex set of tasks in short order (Goodhand
& Sedra,2007; Pritchett etal.,2 010). Central state res-
toration was needed to overcome the legacies of the
1978–2001 wars and begin to dominate the fragmented
political settlement (Khan, 2 018).5 A parallel objective
built into the state design was establishing an ‘enabling
environment’ (Rafi,2022) for a private- sector- led econ -
omy to emerge in a state- minimalist strategy for e co-
nomic management. The state was thus, in broad terms,
meant to obtain the following three objectives relevant
to the topic at hand: (1) establish centralised political
legitimacy and order through coercion or negotiation
with non- state rivals, (2) (re- )build state bureaucracy
capable of providing public services and (3) establish
the institutions that could sustain a market economy for
tax generation as the central tenet of its fisc al policy.
Under this approach, the state's de jure revenue
was formally dependent on objective three bein g ac-
complished. In addition to the extensi ve time and re-
sources typically neede d to achieve objectives one and
two, a temporal interregnum was built into the Afghan
statebuilding process to achieve objective three and its
fiscal promise in the form of taxes. A study of the fisc al
outcome of this interregnum provides a helpful entr y
point for research on the statebuilding process, c on-
sidering that fiscal history is als o the history of state
formation (Tilly,1992).
The state's finances during this interregnum are
often left unexplained in development discourse
(see Di John, 2010; World Bank, 1997 ). In post- 2001
Afghanistan, the state came to overwhelmingly depen d
on ODA as an external source. The consequence of
this interregnum – aid dependency – has eng aged a
large body of scholarly literature, but the underlying
causal mechanism shaping the link between fiscal
system and governance has evaded much attention
(Bräutigam, 2008). The state's de jure fiscal policy
based on this design amounts to a ‘deferred revenue
regime’ in de facto terms, in the sense of making pres-
ent state fiscal revenue dependent on ideal condit ions
that might emerge, citrus paribus, if the putative aims
of the reforms are realised. Related to the legitimacy-
oriented aims of statebuilding, the Afghan state's ODA
dependency determined its political settlement related
to its fiscal policy by inviting powerful influenc e by
Policy Implications
• A synergistic embed dedness of the state in
economic resource allocatio n 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 ou tcome 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 in-
volved in post-war statebuilding should rec-
ognise that success of market-oriented poli cy
in a post-war statebuilding depends on ‘cen-
tralised 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 re-
source allocation and management.
• Incremental reforms – e.g., sector wide ap-
proach to development – could be integrated
into the post-war development strategy by the
state in coordination with external actors be -
yond quick fix measures if thinking regarding
state non-intervention in economi c manage-
ment 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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