What prevents action based on political economy analysis?
As well as the need to underpin governance support with a careful assessment of local conditions and politics, donors also need an informed approach to risk management, and a willingness to stay the course. Greater realism is also required, both about the reform space for accountability in each country and the longer timeframes involved in realising transformational institutional reform (World Bank, 2011).
Change happens slowly and effective support is often based on multi-year commitments. In Mali and Uganda, funding relationships of up to 10 years were able to build strong relationships between local partners and donors. The PACT programme in Mali, for example, is a 12-year initiative that has accompanied the country’s decentralisation process (Box 3.4). The PACT operates at both local and national levels, helping to build multistakeholder governance mechanisms through local councils and to improve the decentralisation framework and procedures. Since its launch in 2002 it has helped the authorities to develop and test new tools for accountability, transparency and public participation in local governance, working with diverse stakeholders who include civil society, traditional chiefs, local authorities, the media and the private sector.
A growing number of development agencies and organisations are investing in tools for political economy analysis as well as in politics and governance research (Box 2.5). This means there is a growing evidence base - particularly for challenges that are inherently political (e.g. the influence of upcoming elections, the degree of political will to enact reforms, the realities of patronage/clientelistic relations, etc.). However, uptake in terms of significant changes in policy and practice and the realisation of more politically-informed approaches remains disappointing (Wild and Foresti, 2011).
Box 2.5. Donors’ work on political economy analysis: some examples
Many donor agencies have sought to find ways of better appreciating the interdependence of institutions in governance and service delivery, especially through the use of various political economy techniques. For example, the Swedish development co-operation agency SIDA has developed an approach known as power analysis, which “involves gaining a deeper understanding of the political, social, cultural and economic issues at play in a country; the power relationships between actors at the societal level and the incentives of these actors to affect or impede change” (SIDA, 2005). In the same vein, DFID has invested significantly in its drivers of change analysis and subsequent tools such as the country governance analysis, which draw on many of the same techniques to help “understand how incentives, institutions and ideas shape political action and development outcomes in the countries where we work” (DFID, 2009).
There are many different factors at play here. In part, a lack of uptake reflects weaknesses in the political analysis itself. For example, findings may not be translated into specific actions that could be implemented by programme staff. Significant steps have been taken to address this, including through the development of more problem-focused, operational research (see Box 2.4 above).
Understanding the political economy of donors themselves is also key - reluctance to conduct political analysis also reflects the incentives and organisational cultures of development agencies. One of the most in-depth studies of the institutional incentives of a donor agency (the Swedish International Development Co-operation Agency, Sida) found that information asymmetries, rapid staff turnover and pressures to allocate funds can undermine attempts to foster strong understanding of the context in which development co-operation was delivered (Ostrom et al., 2001).
Undoubtedly, moves towards more political ways of working can be more risky for donors than purely technical approaches. At the same time, even technical approaches in practice shape political dynamics. Either way donor interventions in this area affect political realities. Adopting a more politically informed approach doesn’t necessarily mean greater interference in domestic politics - but it will help to ensure more feasible support, including through the use of more realistic objectives, better monitoring and management of political risks, and the use of appropriate timeframes.