Political Economy Analysis

The analytical framework employed here is that of political economy analysis, a tool that improves understanding of the drivers of political behaviour, and how this shapes policies and programmes, winners and losers, and the implications for development. This type of analysis, which has a long tradition in the social sciences, has recently gained increased attention in the context of international development, and is promoted by organizations such as the United Kingdom’s Department for International Development and the Governance and Social Development Resource Centre. Although there is no single conceptual framework for the analysis, and the concept is sometimes contested, generally political economy concerns ‘the social relations, particularly the power relations, that mutually constitute the production, distribution and consumption of resources’ (Mosco 2009: 74).

A comprehensive definition of political economy analysis is provided by the OECD-DAC report (Dahl-0stergaard et al. 2005), which describes it as ‘the interaction of political and economic processes in a society; the distribution of power and wealth between different groups and individuals; and the processes that create, sustain and transform these relationships over time’. Its main components are: first, politics, understood in terms of contestation and bargaining between interest groups with competing claims over rights and resources; and, second, economic processes that generate wealth, and which influence how political choices are made. In current world affairs, these processes, which are shaped by incentives, relationships, the distribution and contestation of power between different actors (often closely interrelated), constitute a unified set of dynamics that largely influence development outcomes (DflD 2009; Mcloughlin 2014). Crucial to this study, political economy analysis considers historical legacies, social trends, and prior experience (Mcloughlin 2014), and how all of these factors affect or impede the adoption of a particular technology (in our case, the large-scale use of LPG). Political economy analysis allows for the inclusion of these factors, as well as informal institutions and cultural and social practices in the analysis (Williams, Duncan, and Landel-Mills 2007).

In the context of international development, political economy analysis is often employed as a tool to improve development effectiveness by identifying how and where focus should be directed to promote positive change. Here the tool is used to shed light on South Africa’s and Indonesia’s residential energy transitions and will highlight, through the case studies, that the implementation of energy transitions (in this case LPG) is a highly politicized, locally-driven process. The present analysis, using policy documents, reports, websites, and academic and grey literatures, focuses on the period from when the transition was initiated up to the point where it has become mainstream. Examining this period enables focus on the full adoption of the innovation curve as developed by Rogers (1983). This allows time for economic and political processes to unfold against the backdrop of the country’s development path.

The analysis focuses on three broad areas of the political economy:

  • (1) the interests and incentives facing different groups in society, and how these generate particular policy outcomes that may encourage or hinder development;
  • (2) the role of formal and informal institutions, as well as social, political, and cultural norms in shaping human interaction and political and economic competition;
  • (3) the impact of values and ideas, including political ideologies, religion, and cultural beliefs on political behaviour and public policy (DfID 2009).

The remainder of this chapter is structured as follows. First, a political economic analysis of Indonesia will be presented, followed by one of South Africa. The case studies will be compared and contrasted and differences and commonalities between the studies highlighted. The chapter concludes with a brief summary of findings and concluding analysis.

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