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EARLY ECONOMIC RECOVERY IN FRAGILE STATES PRIORITY AREAS AND OPERATIONAL CHALLENGES

Businesses’ investment in equipment and software should continue to grow at a healthy pace in the coming year, driven by rising demand for products and services, the continuing need to replace or update existing equipment, strong corporate balance sheets, and the low cost of financing, at least for those firms with access to public capital markets. Rising sales and increased business confidence should also lead firms to expand payrolls. However, investment in structures will likely remain weak. On the fiscal front, state and local governments continue to be under pressure; but with tax receipts showing. | HP Early Economic Recovery in Fragile States Priority Areas and Operational Challenges Hugo de Vries and Leontine Specker November 2009 Clingendael Institute Contents 1. Introduction 1 1.1 Research rationale 1 1.2 Research questions 4 2. Early economic recovery concepts goals timing and actors 7 2.1 Initiating development 9 2.2 Contributing to political stability 10 2.3 Timing 11 2.4 International partners in early economic recovery 14 3. General challenges to project implementation 23 3.1 Priority-setting and political pressure 23 3.2 Juggling capacity-building and capacity substitution 25 3.3 General challenges - recommendations 28 4. Track 1 Stabilizing livelihoods through emergency employment for high-risk and high-needs groups 31 4.1 Emergency employment 34 4.2 Emergency employment - recommendations 39 4.3 From Peak 1 to Peak 2 41 5. Track 2 Income-generating activities private sector development and micro- finance for communities 43 5.1 Income-generating activities and livelihood support 46 5.2 Infrastructure and agriculture - recommendations 51 5.3 Private sector development 54 5.4 Private sector development - recommendations 61 5.5 Micro-finance 62 5.6 Micro-finance - recommendations 65 5.7 From Peak 2 to Peak 3 .