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political economy analysis

Busting 5 myths on political-economy analysis

Stefan Kossoff's picture
A young Egyptian protester holding an Egyptian flag, Cairo, Egypt. Photo: Kim Eun Yeul / World Bank


“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.

Making Political Economy Practical

Rachel Ort's picture

Taking politics seriously
 
The idea political incentives play a powerful role in development—creating opportunities for change in some contexts, frustrating efforts in others—is not a new one.  For many years now, academics and aid agencies have acknowledged that the uptake and impact of best practice reforms depends, in part, on the incentives of leaders and citizens, on formal and informal institutional arrangements, on historical legacies and structural drivers.  And as a result, many aid agencies have made efforts to “take politics seriously.”