Poor but MIFFed

Given the many and confusing acronyms in the world of international development, new ones are at a significant disadvantage—unless of course they sound funny or appear in a column in The Economist. Such is the case of MIFFS or Middle-Income but Failed or Fragile States, as featured by the British magazine last June.

In one sense, MIFFS represent a contradiction in terms because they describe countries that have “have graduated from poor to middle-income status” and yet are still considered to be failed or fragile states. According to the World Bank there are 86 economies that fall within the middle-income range. It should be noted, however, that the range is quite broad, “with the highest income MIC having a per capita income 10 times that of the lowest”.

Still, this logic is squarely counter-intuitive. After all, shouldn’t crossing the low-income threshold say something about a government’s ability to enforce the rule of law? And doesn’t reasonable and sustained growth promote stability?

Not according to Brookings. A recent policy brief argues that contrary to popular belief, “rising incomes do not appear to be associated with increasing levels of stability”. Trends suggest that countries getting richer at slower paces lack the infrastructure to combat poverty levels effectively.

This begs the question: how useful is it to label a country a middle-income economy when “ [t]here is poverty, insecurity, and a disregard for human dignity”. As The Economist points out, this disconnect between World Bank income-status and failed state indices often compounds the problems for so-called MIFFS. Once a country graduates to middle-income status it ceases to qualify for certain aid programs by the World Bank. One can only assume that non-profits and foreign investors respond to this move by similarly reducing aid programs and/or amounts.

The solution, The Economist argues, is to change how the aid community approaches development. Whereas before development projects aimed at helping the poorest of countries, donors must now seek to find the best ways to engage with middle-income economies that face distinct types of challenges: “donors admit that what works in poor, stable countries probably won’t in those which are not poor and not stable”. Brooking and The Economist call for immediate action: after all, MIFFS contain roughly 180 million of the world’s poorest (or about 18%).

But “finding a new approach” for all MIFFS isn’t the issue. To be sure, the lack of a specific roadmap to engage MIFFS has not stopped the international development organizations, NGOs, and private ventures from investing in these economies. Maybe then, the problem is not so much one of development as it is one of ego: the tendency to declare victory and walk away.

In a recent post, CGP highlighted the work of the Ethos Foundation on poverty. Their expanded views on poverty take things like stability, government corruption, and insecurity into account. The situation in many of these MIFFS heavily restricts the behavior of their citizens, rendering them poor (or poorer) in a very real way. Combining some of these variables with the WB’s poverty assessment studies may contribute to a better measure of poverty—meaning that we will have to hold back a couple of countries from moving up with some of their peers.

To be fair, while the usefulness of this new category (MIFFS) is yet to be determined, it calls on some introspection on the part of the donor community. Is the current definition of poverty sufficient? And is there harm done by graduating a certain class of economies into the middle-income bracket? In light of these questions, be hesitant to accept MIFFS into your development glossary—even if it was featured in The Economist.

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