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Failed States, Vicious Cycles, and a Proposal

Raghuram G. Rajan

University of Chicago - Booth School of Business; International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

March 2, 2011

Center for Global Development Working Paper No. 243

Rajan examines the problems of failed states, including the repeated return to power of former warlords, which he argues causes institutions to become weaker and people to get poorer. He notes that economic power through property holdings or human capital gives people the means to hold their leaders accountable. In the absence of such distributed power, dictators reign. Rajan argues that in failed states, economic growth leading to empowered citizenry is more likely if a neutral party presides. He proposes a unique solution to allow the electorate to choose a foreigner, who would govern for a fixed term. Candidates could be proposed by the UN or retired leaders from other countries; they would campaign on a platform to build the basic foundations of government and create a sustainable distribution of power. Rajan emphasizes that this is not a return to the colonial model – the external candidate (like all the others) would be on a ballot and the electorate would choose whether he or she was their best chance to escape fragility.

Number of Pages in PDF File: 14

Keywords: failed states, institutions, economic power, human capital, governmental accountability

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Date posted: April 27, 2011  

Suggested Citation

Rajan, Raghuram G., Failed States, Vicious Cycles, and a Proposal (March 2, 2011). Center for Global Development Working Paper No. 243. Available at SSRN: http://ssrn.com/abstract=1824642 or http://dx.doi.org/10.2139/ssrn.1824642

Contact Information

Raghuram G. Rajan (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-4437 (Phone)
773-702-0458 (Fax)
International Monetary Fund (IMF) ( email )
700 19th Street NW
Washington, DC 20431
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
773-702-9299 (Phone)
773-702-0458 (Fax)
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