Monday, 23 May 2016

Lemonade or the LTTE? A Case for Economic Development as a strategy in post-conflict nation building.

Recently there has been mass speculation that Beyoncé only pays the labourers for her Ivy Park range 44p (GBP) an hour. Naturally, in the UK there would be outcry over such a low wage - yet the lack of understanding over financial relativity is holding a lot of these arguments back. The minimum wage for an unskilled worker in industry is 6500-7500 Sri Lankan rupees a month and the minimum wage for a skilled worker is 7500-9000 Sri Lankan Rupees a month. The 'disgraceful' 44p an hour earned by Ivy Park workers, if working for 40 hrs a week (although many work far more than that) would be earning 14987.20 Sri Lankan Rupees a month. 

Capitalist investment into a post-conflict society is a key element of nation-building, especially in a society that has experienced over 25 years of civil war. Again, 44p a month from a UK perspective is disgraceful, but we need to get out of the privileged and idealist Western mindset that we often push onto others (as we also do ideals of democracy etc.. but that's another argument). I have been lucky to visit Sri Lanka, as a beautiful and diverse country it is coming on strength to strength following bloody years of conflict, economic development from outside industries has been key to the creation of sustainable peace and could be damaged by criticism. If Beyoncé were to pull her business out of Sri Lanka, it would be detrimental to the livelihoods of many that depend on it. I invite you to think carefully before you take to social media to spark outrage before understanding a situation fully and the impacts that could have on people. 

I will now outline the importance of economic development in nation-building and Beyoncé... this one's for you. 


The assumption that “economic development inoculates a nation against a relapse of civil war by making the opportunity costs of conflict higher” (Quinn, et al., 2007, p. 182) captures the importance of economic development in a post-conflict nation-building strategy. This author presents the argument that it is the responsibility of domestic institutions to stimulate it, as they are responsible for “providing public goods such as security and safety of people and property and implements industrial and agricultural development policies and macroeconomic policies” (Otsuka & Shiraishi, 2014, p. 3). This paper shall explore the idea that delivering institutions must have an interdependent relationship with the communities they are serving in order to contribute to nation building. This is opposed to international institutions that do not require the level of rapport and interdependency with communities, nor do they have a long term stake in them in the period following the conflict.

This essay will identify the key determinants of economic development as adequate opportunities for education and employment, reformed government administration and an absence of corruption following ethnic conflict/civil war. The main argument will maintain that domestic institutions are the most important influencers in maintaining economic development for sustainable peace and nation-building due to their interdependent relationship with society, this is based on the theory presented by Joel Migdal who rejects Marxist and Structuralist claims that “the states actions are a reflection of social power” and presents the argument that “states may help mold, but they are also continually molded by, the societies within which they are embedded” (Lambach, 2004). We shall conclude by challenging the premise that it is international involvement alone that is pivotal in post-conflict economic development.

For the purposes of this essay, nation building shall be defined as “the creation of an integrated society with functioning state apparatus” (Hippler, 2002) that is driven by “state-society relations” (Otsuka & Shiraishi, 2014, p. 3) and the term ‘economic development’ refers to the improvement of a variety of indicators such as “literacy rates, life expectancy, education, employment and poverty rates” (SVBIC, 2011) and their contribution to economic productivity. Institutions shall refer to the “political and economic institutions including market and non-market institutions, centralized and decentralized institutions, democratic and non-democratic amongst others” (Otsuka & Shiraishi, 2014, p. 3). These definitions are important in this essay as the state apparatus referred to has the potential to boost the integration of society by reflecting the values of reconciliation and inclusion that it wishes its citizens to also develop under a single, multi-ethnic state.

It is argued that both “nation building and economic growth have been the main goals of Southeast Asian countries as well as the foundation to their leaders’ rule given the countries’ distinct historical backgrounds” (Hsueh, 2015, p. 27) as tools to maintain peace and political stability, for most following bloody colonial wars.  The main case study that shall be explored is that of economic state building in Sri Lanka, which is a state that has successfully “met a target of the millennium development goals to abolish extreme poverty” despite “a quarter of a century in a long, bloody and seemingly intractable separatist war” (Athukorala, 2013, p. 1). What presents a unique challenge to our understanding of the Sri Lankan case is that the Sinhalese political elite won a “decisive military victory” (Samarasinghe, 2009, p. 437) over the Tamil Tigers of Tamil Elam, whose aim was to “establish an independent state” (Coakley, 2012, p. 214),  yet decided to use accommodation as a primary form of state-building following the conflict. By including the Tamil community in their post-conflict strategy, both ethnic communities will require a complete reconstruction of their political and economic institutions in order to re-create a state that can be a shared space for both communities to co-exist and contribute to, which will prove difficult to garner loyalty following an end of violence marked by a military defeat as opposed to negotiations.

Inclusive educational institutions are a crucial element of economic development as a tool in state building. This is because participation in education is a mechanism for integration and requires an interdependent relationship between the state and citizens.  Schools, colleges and universities are also crucial forums for the development of citizens and their beliefs, which in a post-conflict context is installing the importance of reconciliation for the next generation, resonate of our primary theory presented by Migdal. In the case of a post-conflict society, if an educational institution is exclusive to one community in terms of access or opportunity, they increase the risk of excluding another (or several) in the process of state building, as that community is then restricted not only in terms of professional employment (another key contributing factor to economic development), “but will restrict successive generations understand the violent conflict that took place within their own society and potentially contribute towards future peacebuilding” (Smith, 2010, p. 3). The sense of community, belonging and ownership that is felt by attending educational institutions is also important when mustering support for a transformed state or society as such feelings can increase social responsibility and trust within the establishments provided by the state.  

What is unique about educational institutions in the case of Sri Lanka is that the Tamil community, prior to 1970, statistically thrived in education. This allows us to view in full circle the impact of how educational institutions can fail the maintenance of societal cohesion and the ability of the state to actively create policy that excludes a particular community, which in the Sri Lankan case saw the militarization of young Tamils in the mid 1970’s. Prior to 1970 “university admissions were based solely on academic qualifications” and this resulted in “50 percent of the students in the country's faculties of medicine and 48 percent of all engineering in 1969 as Tamil” (U.S Library of Congress, 2016). However, this was detrimentally affected by the introduction of the “policy of standardization” that altered university admissions to be based on “standardization according to language” (of which Sinhala was the only official language) and “district based quotas” (Mel & Pathmalal, 2009, p. 3), which was received by young Tamils as active discrimination against them. This resulted in a decrease of Tamil enrolment which in 1980 saw “22 percent of medical students and 28 percent of engineering students were Tamils” (U.S Library of Congress, 2016). Just five years later the military campaign of the Liberation Tamil Tigers of Elam was mobilized starting the bloody 25-year civil war that raged Sri Lanka until most recently. It also became increasingly difficult for Tamils to find employment – particularly in public administration. Thus representative of this author’s argument that education is a key mobiliser in nation building, as when communities are ethnically discriminated against it contributes to reducing their faith in educational institutions which deprives them of opportunities to then contribute to the economy, integrate with the dominant ethnic community and results in them losing faith in the institutions and essentially the state.

Following the end of a violent conflict, particularly one that has seen ethnic divides and segregation, a state can either be left with institutions that “by definition have ceased to exist” (Ottaway, 2003, p. 257) as a result of total destruction through war, or institutions that discriminated against a minority community during the civil war[1]. This author argues that new institutions are essential as they need to operate with new values that represent society, and by putting Migdal’s theory into practice – when society is undergoing a period of reconciliation those within the institutions are essentially facilitating the transition and need to be strong advocates for it. Re-building these institutions with inclusion as a means of integration as a sentiment is therefore a crucial element of post-conflict state building.

Constructing a new and carefully crafted civil service is a pivotal strategy in economic development in a post-conflict society. The “reconstruction of institutions that existed beforehand” (Caplan, 2005, p. 136) must be avoided to evade the inequality and economic elements that contributed to the conflict in the first place, which if replicated could become a source of “civil strife, especially in societies where economic disparities coincide with ethnic, religious, tribal or other kinds of social differentiation” (Caplan, 2005, p. 136). What is evident when complete reform does not occur can be attempts to offer tokenistic gestures of inclusion that are unsustainable and economically inefficient.
A classic example of this are the poorly executed attempts to alter the civil service following the Indo-Lanka Peace Accord in 1988 which resulted in Tamil gaining equal status with Sinhala as a national language. This provided the Tamil community with increased opportunities to work in government where a lack of Tamil speakers was evident. However, despite the only discrepancy being identified as linguistic, this author concedes that the lack of cultural or structural participation of Tamils in governance also proved to discredit the process of inclusion. Such inequality was initially established as a result of not only Sinhala being the ‘only official language’ but also to the expanding role of patronage politics throughout the 1950’s and 60’s that the Jayewardene government made increasingly overt through the creation of “job banks” (U.S Library of Congress, 2016) which allowed legislators to allocate a number of ‘low level’ positions amongst their followers. This resulted in two specific implications for Tamils seeking civil service roles, “first, merit qualifications that would have benefited educated Tamils were sacrificed to patron-client politics; second, the patronage system provided Tamils with little or no access to public employment because their political representatives” (U.S Library of Congress, 2016). This inequality was not only representative of bad governance, but shaped the political structures towards the exclusion of the Tamil community in the work of the civil service.

This author argues that the lack of Tamil participation prior to the Indo-Lanka Peace Accord meant that the civil service structures that were already in place were based on rhetoric of Sinhalese dominance in the political sphere. Therefore, even by opening up the opportunities of employment to Tamils the structures of governance were still favoring another community through the service structures they were administering. A distinct lack of reform was evident during the early 2000’s in Sri Lanka, where the civil service was branded extremely ineffective and inefficient. A report conducted by the United National Front government in 2002 stated that the Sri Lankan civil service was experiencing “terrific problems such as over-staffing, an excessive number of institutions, and an undue reliance on administrative procedures, weak institutional control mechanisms and unnecessary and too great political interferences” (Government of Sri Lanka, 2002, p. 86).  The re-development of these institutions is therefore the only solution to these inefficiencies, this must be done in consultation with all parties that the institutions are there to serve, which in turn will generate loyalty through a sense of ownership of the new civil service institutions.

Private business investment into a post-conflict society is key to providing opportunities for employment, especially following institutional reform of the education sector. It is also important to creating trustful relationships between the state and society. This is because successful investment is essential in providing the “revenue necessary to finance state institutions” (Caplan, 2005, p. 136) through tax and employment. It is not only the reform of economic institutions that will contribute to the economic development of a post-conflict society but the domestic political and social institutions, representative of their importance in state/nation building. Where domestic institutions become incapacitated so does “public security and the rule of law” (Caplan, 2005, p. 135) which can allow organized crime, bureaucratic predation, cronyism and corruption to flourish. This not only increases the chances of a relapse into violent conflict but has the potential to “curb private investment to the region” (Caplan, 2005, p. 135) which is counterproductive to our understanding of state institutions as ‘functioning’ as a result of successful nation building. Evidence of this occurring took place in Bosnia-Herzegovina where corruption and crime combined with high taxes resulted in only “$90million of foreign investment, compared with the $1.4billion received in neighboring Croatia” (Caplan, 2005, p. 136). Such evidence of reform in Sri Lanka is currently limited given the recent timeframe of the conflict having ended, however we are able to see the effects of corruption hindering the economic development of the country and the recommendations that have been put forward.

Corruption serves to hinder nation building by “exacerbating inequality, generating mistrust between different social groups and making development less sustainable” (Lindberg & Orjuela, 2014, p. 723) and as we have discovered, trust is a fundamental element in creating interdependent relationships between institutions and civil society. Such sentiments are evident through the UK governments Overseas Business Risk Assessment on Sri Lanka, that states that “allegations of corruption plague many government deals, the police, the inland revenue, customs and indeed almost every public body that businesses rely on to function fairly” (UK Trade and Investment, 2015) and warns investors of these risks. Such problems need to be addressed in order for private businesses to add to the efforts of the state to create employment opportunities. This was recognized as a crucial issue prior to the 2015 presidential election in Sri Lanka and resulted in strong public demand for reforms. ‘Good governance’ was a key feature of the reforms that were called for, by both the public and national policy research institutes. Specifies included “combatting corruption” and “enhancing transparency and accountability” (IPS, 2015). Although there has been little progress made since these reforms were called for, there has been significant downsizing of the civil service and a review into the efficacy of provincial council. What is significant about the political lobby that has led to this is the recognition of discrepancies in governance as opposed to falling into the easy trap of blaming one community for the failings. Although corruption is still an issue, the approach of civil society lobby groups in calling for reform politically represents their faith that the system can be reformed and that they have influence within it. This reflects the interdependence of state/society relations and how society is lobbying for this aspect of the state to change.

As this essay is arguing for economic development as a means to support nation-building, it is important to note solutions to the issue of corruption in public administration, even if Sri Lanka is unable to provide us with concrete examples of overcoming it. Theoretically, in order to overcome corruption when re-building institutions, the state must focus on “ideology as opposed to efficiency”, as efficiency tends to be a result of international pressure for results of their aid, whereas ideology accounts for the “political question of who gets what” (Boyce, 2003, p. 283), which, when combined with “transparency and accountability” (Boyce, 2003, p. 285), can prevent corruption becoming an issue at the outset. This leads us to our final argument that shall critique the idea that international institutions are essential in post-conflict economic nation-building

In order to understand the pivotal importance of domestic institutions as the main drivers in shaping economic development, it is essential to challenge the preconception within the field that internationally managed projects are the key drivers. This author wishes to challenge the argument presented by the World Bank that “to have a positive impact on peace, aid given to countries emerging from civil wars should be massive” (Suhrke & Buckmaster, 2006, p. 338) and that international institutions are the deal breakers in financing successful state-building. What is actually apparent when working in a ‘top down approach’ is a “CNN effect” amongst international institutions that results in the “frontloading of aid in a dysfunctional manner” (Suhrke & Buckmaster, 2006, p. 338) to appease politicians who wish to see an immediate peace or improvement in the functionality of the state as opposed to effective institutions that local people feel add to the economic development of the state and in turn their sense of nationhood.

This author argues that the administration of economic development projects by international institutions is not only inefficient to the concept of state building but is dangerous to the entire concept of economic development as a means of nation-building. This is primarily due to the flawed rationale of neo-liberal institutions such as the EU/UN/World Bank whose “frameworks are externally designed with a European or northern, developed, rational and individualistic context in mind” (Richmond, 2013) and as these projects are often coordinated from New York, Geneva or Paris without an experienced understanding of the relationships between ethnicities within the communities they are aimed at, they can end up re-igniting conflict, or deeming such projects tokenistic. This argument has been proven in Sri Lanka where “large irrigation projects involved landless Sinhalese people being resettled in traditional Tamil areas” (Orjuela, 2005) and consistently throughout history.

In conclusion, this author has based this paper on the “state in society” theory presented by Joe Migdal, yet has further presented the argument that stresses the importance of the interdependence of domestic institution and civil society relationships in the process of state-building. Domestic institutions have been argued to be primary stakeholders in sustainable peace and this has what has distinguished their role in state-building as not only more critical, but influential in shaping the process, which distinguishes them from their international counter-parts. This author has gone further to argue that progressive economic development is an essential by-product of successful interdependent state-society relations and that collective prosperity shaped by inclusive and integrated domestic institutions have a high chance to contributing to sustainable peace through creating trust.  These theoretical arguments have been displayed through an analysis of civil service reform, educational and employment opportunities, private sector investment and corruption as well as a minor critique of the role of international institutions.











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[1] Such discrimination was experienced by the Tamil community in Sri Lanka in the civil service recruitment process due to Sinhala being declared the only official language.

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