ABSTRACT
The challenges faced by post-conflict countries are daunting and include recovering from the destruction of physical, human, and social capital and coping with severely weakened state capacity, distorted economic incentives, widespread poverty, population displacement, and unemployment. Idiosyncrasies aside, we posit that all reconstruction efforts must deal with similar economic, political, and social challenges, such as establishing genuinely inclusive and democratic governance; repatriating human and financial resources, or dealing with the donor community. Our analysis of the reforms to be considered in an economic agenda for reconstruction is based on three premises. First, in order to gain legitimacy and be sustainable, reconstruction policies should focus on achieving wider economic inclusion and lesser inequality, in addition to achieving substantial reductions in unemployment, especially among the youth. Second, reconstruction policies should be primarily geared towards changing, improving or, even in an extreme case, eliminating altogether the pre-conflict institutional fabric of the country. Third, proposed economic reforms and policies ought to be in line with the establishment of an implicit or explicit new form of the social contract that incorporates the principles of democracy.
