Business Environment Reform in Fragile and Conflict Affected States

Whilst there is a large collection of research around how to design business environment reforms in general, there is relatively little which looks specifically at fragile and conflict affected states. It is with this view that BERF launched the first of its scoping studies to look at the evidence on Business Environment Reform in Fragile and Conflict Affected States.

DFID is increasingly focusing bilateral aid on Fragile and Conflict Affected States, committing 30% of official development assistance to these countries. Whilst there is no commonly accepted definition of Fragile and Conflict Affected States, DFID’s working definition includes countries where the government cannot, or will not deliver core state functions, such as providing security, justice, and basic services to the majority of its people. Currently, 21 of DFID’s 28 priority countries are designated as Fragile and Conflict Affected States.

Fragile countries account for a fifth of the population of developing countries, but cover a third of people living in extreme poverty. People in fragile states are more than twice as likely as those in other developing countries to lack clean water; more than three times as likely to be unable to send their children to school and twice as likely to be malnourished than those in other developing countries.

The evidence linking business environment reform with increased investment, greater numbers of jobs and reductions in poverty is limited. With DFID increasingly focusing on Fragile and Conflict Affected States, and simultaneously placing more emphasis on interventions which will stimulate economic growth, it is vital that the direct and indirect, intended and unintended consequences of Business Environment Reform are better understood.

The overall objective of this study is to help DFID country offices and central policy teams to improve their understanding and implementation of Business Environment Reform in Fragile and Conflict Affected States by contributing to the evidence base of what works and what does not work. The study will aid implementation of DFID’s programmes, DFID’s central policy work, and the global development community more broadly. Further objectives of this scoping study are to:

  • Provide a high level assessment of the availability of evidence on how to design effective BER in Fragile and Conflict Affected States.

  • Identify the key complete or ongoing research on Business Environment Reform in Fragile and Conflict Affected States.

  • Identify the key gaps in the evidence that should be addressed as a matter of priority for DFID.

  • Make recommendations for further research to help build evidence around these gaps.

  • Where possible, note the availability of evidence in relation to:

  • different functional areas of business environment reform (such as licensing, commercial justice, land, access to finance, labour, tax and public-private dialogue)

  • different types and levels of fragility

  • cross-cutting themes of gender and environment.

It is expected that the scoping study will inform the design of a piece of policy research into the effectiveness of Business Environment Reform in Fragile and Conflict Affected States. That research will enable DFID, and the wider development community, to design reforms which have a greater impact, both directly for the poor as entrepreneurs and employees, and indirectly through higher levels of investment and higher rates of inclusive economic growth.

This output of this study will be published on this website in Mid-May. If you’d like to speak to Policy Research Co-ordinator Dan Aylward about this study, or any other piece of research, please contact Dan.Aylward@KPMG.co.uk.