Political economy analysis

Governance assessment

Political economy analysis is part of a broader landscape of donor work on governance assessment. Whilst conventional governance assessment is very different to political economy analysis - governance assessment tends to focus on measuring the performance, accountability, responsiveness and capacity of formal institutions, whereas political economy analysis aims to understand why deficits in these areas arise - the two can be complementary. Governance assessment can inform a political economy analysis and vice versa, and the issues they identify may overlap.

Many donors undertake governance assessments, using their own distinct methodology and approach. In spite of calls for a more harmonized approach, examples of co-ordinated assessments are rare (OECD DAC, 2009). There is also concern that governance assessments should encourage country ownership, and should draw on, and align with, nationally driven or peer-based assessments. The Rwanda Joint Governance Assessment is one example of how such principles can be built into governance assessment, and illustrates the opportunities and difficult challenges involved.

Page contents:

• International guidance and lessons learned
• Donor approaches to governance assessment
• Participation and national ownership

International guidance and lessons learned

Kaufman, D., and Kray, A., 2007, ‘On Measuring Governance: Framing Issues for Debate’, Issues paper for 2007 Roundtable on Measuring Governance, World Bank, Washington D.C.
How can the measurement of governance be enhanced? This paper highlights key issues for users and providers of governance indicators. It contends that: (1) all governance indicators have weaknesses; (2) there are no easy solutions in measuring governance; and that (3) the links from governance to development outcomes are complex. Policymakers should view the different types of indicators as complementary rather than competing.
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Further information on the conceptual and methodological challenges of measuring governance, including selecting and using governance indicators, can be found in the GSDRC’s measuring governance topic guide.

OECD DAC, 2008, 'Survey of Donor Approaches to Governance Assessment', Organisation for Economic Cooperation and Development - Development Assistance Committee, Paris
Many development agencies are engaged in assessing governance. What are their approaches and how can these be more effectively harmonised? This study from the Organisation for Economic Cooperation and Development   surveys donors’ use of general and thematic governance assessment. Most approaches are driven by policy dialogue, detailed planning of governance enhancement activities and strategic decisions regarding aid to specific countries. Linkage to a donor’s programme, demand from the field and removal of institutional disincentives are important in determining how governance assessments are used.
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OECD DAC, 2009, ‘Donor Approaches to Governance Assessments: Guiding Principles for Enhanced Impact, Usage and Harmonisation’, Organisation for Economic Cooperation and Development - Development Assistance Committee, Paris
This note presents the findings of an initial survey of donor governance assessments, which pointed to the risk of frequent duplication and overlap between donor tools, as well as the need to improve practice with regard to greater reliance on partner country assessment processes. The guiding principles for enhancing the impact, usage and harmonisation of governance assessments are presented in five areas: (1) Building on and strengthening nationally driven governance assessments; (2) Identifying a clear key purpose to drive the choice of assessment tools and processes; (3) Assessing and addressing governance from different entry points and perspectives; (4) Harmonising assessments at country level when the aim is to stimulate dialogue and governance reform; and (5) Making results public unless there are compelling reasons not to do so.
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The following article identifies how donor-driven governance indicators (such as those of the World Bank) have become politicised, functioning to determine aid allocations and the general public perception of a country’s government.

Arndt C., 2008, 'The Politics of Governance Ratings', International Public Management Journal, vol. 11, no. 3, pp 275-297
What explains the popularity and misuse of the prominent governance indicators produced by the World Bank and others? This article argues that producing and using a range of more targeted, transparent indicators would benefit all stakeholders. Among hundreds of existing governance indicators, the most popular are perception-based composite indicators, primarily of use to international organisations, donors, investors and the media. These indicators summarise vast amounts of data that exists for a large number of countries, but the drawbacks of relying heavily on them are significant.
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Donor approaches to governance assessment

DFID Country Governance Assessment

DFID, 2008, 'Country Governance Analysis', How To Note, Politics and the State Team, Department for International Development, London
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UNDP Democratic Governance Assessments

UNDP, 2008, 'Global Programme Capacity Development for Democratic Governance: Assessments and Measurements, 2008-2011', Programme Proposal, Oslo Governance Centre, United Nations Development Programme, Oslo
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• UNDP’s web page on Democratic Governance Assessments includes information and publications on both UNDP’s and other donors' approaches to governance assessment.

World Bank: Institutional and Governance Review

World Bank, 2001, 'Institutional and Governance Reviews', Tools and Practices 15, World Bank, Washington D.C.
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• World Bank’s web page on Institutional and Governance Reviews

Participation and national ownership

Donors are increasingly concerned that governance assessments should encourage country ownership, and should draw on, and align with, nationally driven or peer-based assessments.

UNDP, 2007, ‘Opportunities for Inclusive Participation and National Ownership’, Seminar, Bergen, Norway, 23 –25 September 2007
This report presents the results of a 2007 UNDP/ Chr. Michelsen Institute (CMI) seminar focused on governance assessments in the context of the Paris Declaration and its principles of national ownership, national capacity development, alignment and harmonization. The conference aimed to provide an international forum to bring in the voice of developing country partners as well as to expand the focus of governance assessments beyond donor driven approaches to nationally driven governance assessments, and assessments based on a peer review mechanism.
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Williams, G. et al., 2009, ‘Carrying out a Joint Governance Assessment: Lessons from Rwanda’, The Policy Practice, London
Can a joint approach to governance assessment help to improve aid effectiveness? What can be learned from the first Joint Governance Assessment (JGA) undertaken in Rwanda during 2008? A JGA aims to bring government and development partners together to review governance performance based on commonly agreed indicators. This brief from The Policy Practice recommends that such an assessment can prove to be helpful to advancing dialogue, but is likely to be a long-term and difficult process that is only suited to particular circumstances where the process can address joint concerns of government and donors.
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Hyden, G. et al., 2008, 'Governance Assessments for Local Stakeholders: What the World Governance Assessment Offers', Overseas Development Institute, London
How can governance assessments enhance governance as an analytical tool and a civic activation mechanism? The World Governance Assessment (WGA) is based on principles of national ownership and local consultation, and the need to strengthen monitoring institutions and diagnostic tools. This Overseas Development Institute (ODI) paper publishes findings from the WGA second round, arguing that it is uniquely placed to serve both donor and local interests. The WGA builds capacity of local researchers, provides a sense of ownership, captures local context, and allows for cross-country comparison.
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Maksym, I. and Shah, A., 2009, 'Measuring and Monitoring Governance by Listening to the People', Draft, World Bank, Washington, D.C.
How can governance measurement be improved? Governance indicators influence development work and foreign direct investment, but this World Bank paper argues that current indicators are inadequate because they fail to conceptualise governance or to capture citizen opinion. It offers instead a citizen-centric framework for measuring governance quality based on four dimensions: responsiveness, fairness, responsibility and accountability. Governance is "an exercise of authority and control to preserve and protect public interest and enhance the quality of life enjoyed by citizens".
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