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Can a Political Economy Approach Explain Aid Donors’ Reluctance to Think and Work Politically? Guest Post from Neil McCulloch

Duncan Green's picture

The more enlightened (in my view) aid types have been wagging their fingers for decades, telling their colleagues to adopt more politically literate approaches to their work. Why isn’t everyone convinced? Neil McCulloch applies a bit of political economy analysis to the aid business.

Over the last fifteen years or more, a new approach to development assistance has been gaining ground in policy circles. Broadly entitled the “political economy” approach, it attempts to apply a more political approach to understanding development problems and, importantly, development “solutions”. In particular, a central tenet of the approach is that many development problems are fundamentally political rather than technical and that therefore solutions to these problems are most likely to come from inside a country’s polity than from outside. Perhaps the most famous recent example of this line of thinking is Acemoglu and Robinson’s 2012 book Why Nations Fail.

Acemoglu and Robinson conclude that if each nation’s fate depends primarily on its domestic political struggles, the role for external development assistance is minimal. However, the response of practitioners to this field is to turn this argument on its head i.e. that is, if indeed each nation’s fate depends primarily on its domestic political struggles, development assistance should be trying to influence these struggles in ways that make pro-development outcomes more likely. Yet despite more than a decade analysis, the political economy “approach” is still rarely used by donors in the field. Why? I think there are four reasons:

Government Spending Watch - A New Initiative You Really Need to Know About

Duncan Green's picture

I’m consistently astonished by how little we know about the important stuff in development. Take the Millennium Development Goals – the basis for innumerable aid debates, campaigns, and negotiations. A large chunk of the MDG agenda concerns the size and quality of public spending – on health, education, water, sanitation etc. So obviously, the first thing we need is to know how much governments are spending on these things, right?

Well no actually, because we don’t have those numbers. Until now. Oxfam has teamed up with an influential and well-connected NGO, Development Finance International, which advises developing country governments around the world. Working with a network of government officials, DFI has pulled together and analysed the budgets of 52 low and middle income countries (With another 34 to follow). The result is a new database, called Government Spending Watch, (summary of overall project here) and a report ‘Progress at Risk’, previewed in Washington last Friday in a joint DFI/Oxfam America event to coincide with the IMF and World Bank Spring meetings. The full report won’t be ready ‘til May, but an initial draft exec sum is available, and here’s what it says.