Political economy analysis

Making use of political economy analysis: operational relevance to development agencies

Critics contend that aid has failed to account for the fact that development is fundamentally driven by politics (the formal and informal processes through which decisions are made concerning the use, production and distribution of resources in any given society). This has important implications for the way aid is delivered, suggesting a need for greater realism about the sphere of donor influence. Donors are, after all, themselves political actors. But whilst there is an emerging consensus that political economy analysis should be undertaken to help identify the potential for pro-poor reform, there is less clarity regarding whether and how aid modalities are capable of adjusting to political realities and the extent to which political analysis is changing donor behaviour.

Unsworth, S., 2008, ‘Is Political Analysis Changing Donor Behaviour?’, Paper prepared for the Development Studies Association Conference, London
Research increasingly emphasises that what works in development depends on country-specific realities and opportunities. Political analysis needs to be recognised as central to the development process, so that donors make the necessary investment in understanding local political dynamics. This paper from the 2008 Development Studies Association conference finds that while political analysis is influencing specific aspects of donor activity, its impact is fragmented and donors’ default position remains technocratic. Strong, visionary leadership is needed to enable donors to make major changes in their thinking, organisation and culture.
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Leftwich, A., 2011, 'Thinking and Working Politically: What Does It Mean, Why Is It Important and How Do You Do It?' in Politics, Leadership and Coalitions in Development: Policy Implications of the DLP Research Evidence, Research and Policy Workshop, Frankfurt, Germany, 10-11 March, pp. 3-11
This paper suggests that working politically in a developmental context means directing attention and support to the agents of reform and development (leaders and organisations). This allows investment in the local processes that will resolve problems – such as problems of collective action – through the work of alliances and coalitions. Hence, it will drive the formation and consolidation of the locally appropriate, feasible and legitimate institutions that are most likely to advance development outcomes.
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Nunberg, B., Barma, N., Abdollahian, M., Green, A. and Perlman, D., 2010, ‘At The Frontier of Practical Political Economy: Operationalizing an Agent-Based Stakeholder Model in the World Bank’s East Asia and Pacific Region’, Research Working Paper 5176, World Bank, Washington DC
How is it possible to ensure that programmes are politically feasible? This paper documents findings from the World Bank East Asia and Pacific Region's pilot of the Agent-Based Stakeholder Model. The study finds that this model helped construct policy debate on civil service reform in Timor-Leste; helped identify key coalition partners in Mongolia; and underscored the need to tackle smaller reforms on which broad consensus could be achieved in the Phillipines. Mainstreaming the model as a regularly applied analytic instrument could significantly improve operations in supporting politically realistic reforms in client countries.
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Williams, G., Duncan, A., and Landell-Mills, P., 2007, ‘Making the New Political Economy Perspective more Operationally Relevant for Development Agencies', The Policy Practice, London
How can donors more effectively put into practice the principles of the New Political Economy Perspective (NPEP)? This policy brief from The Policy Practice argues that if aid is to be effective, there is no alternative to a careful and long-term approach to development, based on in-depth understanding of the political context. Donors therefore need to address the system of incentives and restraints that affects key change agents. 
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De Haan, A. and Everest-Phillips, M., 2007, 'Can New Aid Modalities Handle Politics?', WIDER Research Paper, vol. 63, UNU-WIDER, Helsinki
Do aid modalities take sufficient account of political context? Are ambitions of better political understanding inevitably thwarted by aims to increase aid flows? This paper from UNU-WIDER considers whether recent commitment to increasing financial flows, scaling-up of aid, and promoting donor coordination are compatible with a political understanding of policy processes in partner or recipient countries. It argues for increased socio-political analysis and puts forward ways in which a better understanding of political context and change can inform the post-Monterrey consensus. As a starting point, it is essential to see donors as political agents.
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Communications and political economy

Communications advocates argue that communications tools and techniques can be used to turn political economy analysis into action: that is, they can address political barriers in the form of lack of political will among key government leaders, vested interests, lack of citizen demand for accountability, or hostile public opinion. The World Bank’s Communications for Governance and Accountability Programme (CommGAP), for example, suggests that strategies should include building political will before embarking on public engagement, taking public opinion seriously, adopting a clear and unifying message, and seeking to frame public debate strategically.

Communication for Governance and Accountability Program, 2009, ‘Political Economy Analysis to Action: Political Communication Approaches and Techniques’, CommGAP, World Bank, Washington, D.C.
Why are political communication approaches pivotal to efforts to reform governance systems? This study from the World Bank suggests that reform managers must be able to persuade society. Furthermore, although reform includes technical challenges, the challenges of adaptation require political communication.
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Odugbemi, S., and Jacobson, T., eds., 2008, ‘Governance Reform Under Real World Conditions’, Communications for Governance and Accountability Program (CommGAP), World Bank, Washington, D.C.
What are the key challenges for governance reform in complex, diverse sociopolitical and economic conditions? How can these challenges best be addressed? This volume from the World Bank argues that successful, sustained reform requires the alignment of citizens, stakeholders, and voice. Reformers must overcome adaptive challenges such as public opinion, self-interested forces and inertia, and this requires skilled communication. Communication links the constitutive elements of the public sphere – engaged citizenries, vibrant civil societies, plural and independent media systems, and open government institutions – to facilitate the national dialogue which shapes informed public opinion.
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