What might be an equivalent commitment by DFIs toward fragile states? It has to be simple and unhedged: for example, had Draghi said ‘We will do whatever _we can’_ , instead of ‘Whatever _it takes’_ , it would have had little or no effect. The former phrase, though apparently a commitment, would clearly have left the president free, in the event of a failure of the euro, to exonerate himself by saying ‘We did all we could’. So, the equivalent DFI commitment has to leave the DFI with an unqualified exposure to achieving the commitment. This tells us that the commitment must be within the power of the DFI. The temptation is for the DFI to respond to this by committing to actions rather than outcomes, but this is likely to be ineffective since it leaves firms facing uncertainty as to whether the actions will succeed. Hence, the commitment must be to some outcome that matters for the firm, _but is believed by the firm_ to be within the power of the DFI.

The italicized qualification is important: Draghi’s phrase worked so well partly because asset holders, although unsure of his exact powers, recognized that whatever his powers were, he now had a personal interest in pushing them to the limit (as indeed proved to be the case). Firms will similarly be unsure of a DFI’s powers: most obviously, how much money will a DFI be willing to spend in trying to make a commitment work? Suppose, for example, that the DFI’s public commitment is ‘We will do whatever it takes to get this industrial zone up to 10 operating firms by 2023’. Precisely because this puts the DFI so firmly on the hook, it may well be sufficient to anchor expectations: a firm investing in 2020 can be highly confident that it will only have three years to wait before the cluster is at a viable scale. In turn, this puts bounds on the compensation required for first mover disadvantage. To make the commitment viable, the DFI may need to get commitments from the government that it will implement supporting actions, and more importantly, refrain from actions that might cause damage.

As discussed above, for commitments by DFIs to work, they need to be credible and so plausibly within their powers. This, in turn, confines DFI commitments to specific, time-bound goals such as the minimum size of a cluster. An overarching goal, such as escape from the fragility trap, cannot become either a DFI or even a donor commitment, since it depends upon events beyond their powers.

# _Falsifying a damaging narrative_

The ‘basket case’ narrative is very far from being a profound analysis of fragility. The notion that there is some unchangeable characteristic that dooms the society has repeatedly been falsified by evidence that provided a more credible narrative.

In the 1950s, the country that was most commonly the recipient of the ‘basket case’ explanation was China.<sup>30</sup> The rise of a few East Asian countries during the 1970s decisively falsified the ‘basket case’ narrative for the entire region. This helps to explain why, in the past decade, Asian investment in fragile states has increased far more rapidly than European investment. The ‘This country is a basket case’ narrative is much less credible to Asian firms, partly because within living memory it was also applied to their own countries, and partly because they are relatively new arrivals in the current fragile states. Having been falsified at home, they are somewhat immunized against the ‘basket case’ account of events. In its place, they are more inclined to adopt an equally simple

> 30 See Collier (2017) for a survey of cultural explanations for national failure.

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