“There has been a broad recognition amongst economists that “institutions matter”: poor countries are not poor because they lack resources, but because they lack effective political institutions”. Francis Fukuyama, the Origins of Political Order, Vol 1 (2009)
For development professionals, there is no getting away from the fact that politics shapes the environments in which we work—that our programs can and do fail when we don’t take politics into account. But despite growing evidence that political economy analysis (PEA) can contribute to new ways of working and ultimately better results, the politics agenda remains what Thomas Carothers calls an “almost revolution” in mainstream development practice.
There are many factors at play: limited staff capacity to engage with politics, bureaucratic incentives to meet lending targets, a preference for best practice solutions and institutional blueprints. Many continue to argue that it is not the business of development banks or aid agencies to analyse politics, let alone act on key findings. This resistance is posited on several arguments—or myths—which I address below.
Political Economy Analsyis
From September 17-19 the World Bank’s Governance Partnership Facility (GPF) and the Overseas Development Institute (ODI) hosted donors, researchers and consultants in London to look back at the GPF’s experience, and forward at ‘new directions’ in governance. The ‘governance crowd’ broadly agrees that their work, to be valuable and valued, must be connected to politically informed programmes, better services, and ultimately development outcomes. This consensus now even extends to the bastion of public financial management.
In practice, this connexion involves understanding political factors that drive institutional change and development, and using these understandings to improve development assistance: ‘thinking and working politically’. There are now many tools for political economy analysis, and there is a growing literature on what politically informed development programming can achieve, including a recent World Bank volume, and case studies from ODI, the Asia Foundation, and the Developmental Leadership Programme.