The Economics of Failed, Failing, and Fragile States: Productive Structure as the Missing Link

The starting point of this paper is the proposition that there is a strong relationship between a particular type of national economic production structure and the propensity of a nation-state to fail. The failed states have common economic factors that distinguish them from, e.g. Finland, Canada or Singapore. The assertion is that any policy aiming at preventing nation-states from failing and/or alleviating poverty, should . in order to avoid treating mere symptoms rather than causes . include an analysis of how to bring the productive structures of failing states closer to the structure of those states that work satisfactorily and democratically. Typically failing and failed states have a very low percentage of GDP produced in the manufacturing (increasing returns) sector. The paper will provide extensive statistical data from 1950-2003 documenting the shift in national economic structure as a necessary starting point for economic growth.