The international development community often operates under a simple, powerful ideal: establish clear rules, boost transparency, and eliminate corruption. This is the standard definition of good governance in fragile states. Yet, on the latest Flywheel Economics Podcast episode, Tobias Haque, Lead Country Economist at the World Bank Group in Pakistan, argues this standard playbook is deeply flawed.

Our conversation began with a look at the standardised solutions. Development agencies frequently recommend systems like Public Financial Management (PFM), which are designed for stable, developed countries. However, applying these reforms in contexts where the rule of law is weak often amounts to what Haque calls “pushing on a string.” For instance, new laws and procedures are simply ignored when powerful elites control the means of violence. The accountability loops that drive efficiency in stable nations are entirely missing in these environments.

Trading Efficiency for Stability

Furthermore, Haque highlights a profound and uncomfortable paradox. While we strive to eliminate elite patronage and economic rents, these very distortions can sometimes be the only glue holding a fragile society together. Elites rely on these rents to maintain social order and prevent a return to violence. Consequently, attempting to eliminate rents too quickly, before the state has the capacity to enforce new, inclusive institutions, can lead to total systemic collapse. This theoretical challenge became frighteningly real for Haque, who was present in Afghanistan during the Taliban takeover. This climax of institutional collapse shaped his belief that short-term peace must often be prioritised over textbook economic efficiency.

Ultimately, the lesson for achieving good governance in fragile states is clear: the path must be context-driven. It requires policymakers to move beyond the one-size-fits-all model. Therefore, we must start by identifying which constraints truly matter and managing the unavoidable trade-off between securing social order today and achieving economic efficiency tomorrow.

Special thanks to our guest, Tobias Haque. Listen to the full episode now to explore this critical policy shift and shares your thoughts with us on Instagram, LinkedIn, and X (formerly twitter).