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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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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