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.”
Initially, a key challenge facing these efforts was ensuring that political economy analysis sufficiently provided practical guidance to aid agency staff. The edited volume Problem-Driven Political Economy Analysis: The World Bank’s Experience (Fritz, Levy & Ort 2014) explores how the World Bank has tackled this challenge over the last ten years. One key lesson emerging from this volume is that a problem-driven approach can help practitioners identify critical constraints and opportunities for country engagement—presenting very specific advice about how political and economic drivers impact their work.
This approach begins with a specific development question the analysis will inform. The scope of this question might be quite broad: In light of informal mechanisms for managing political support, in what sectors might it be the “right moment” to engage? Or what are the incentives of national elite to support policies of shared growth? The scope can also be narrower, assessing sector dynamics in detail or evaluating a specific development project: What is the pattern of rent sharing in the roads sector, and how will it impact a proposed World Bank intervention? Who are the important stakeholders in agriculture and what steps can be taken to insure credible commitments for investments in the sector? For this narrower type of work, analysis has been most useful when anchored in an understanding of country level decision-making.
Critically, problem-driven political economy is conducted with the specific intention to offer policy recommendations about feasible ways forward. This shapes and guides the research team, focusing their attention on the practical challenges faced by policymakers on the ground. In difficult contexts, recommendations may highlight second-best policies that adapt to existing political economy dynamics—working with the status quo to find small (and unconventional) openings for progress. In other cases, where the moment is right, recommendations might focus on policies that seek to expand the space for reform: enhancing the information available to local actors, fostering multi-stakeholder engagement or supporting coalitions for change. (Click here for a table of policy options proposed in Problem-Driven Political Economy Analysis)
Problem-driven action and the next frontier:
Looking back, ten years of analytic work and knowledge management at the World Bank reflect that problem-driven analysis can offer clear guidance to aid agency staff. Yet—as both allies and critics point out—there is more to “taking politics seriously” than the analytic work itself. This includes balancing the need for deep, formal assessments against the need for just-in-time insights; building partnerships between analytic teams and operational staff; and navigating the design of robust and feasible policy options when the pressure for (perceived) low-risk, first-best reforms can be quite strong. Looking forward, the new frontier for political economy at aid agencies will be identifying the “nuts and bolts” of thinking and working politically.
What are some initial entry points for supporting politically savvy “problem-driven action?”—I propose the following possibilities:
- First, the development community should continue efforts to document what prompts staff to commission political economy analysis, what are key findings and recommendations, and whether these recommendations are adopted. Impact stories should also focus on what non-analytic factors contribute to politically informed project design and implementation. These lessons should be shared widely.
- Second, additional investments should be made in mapping common challenges facing key sectors. Though political economy dynamics can be context specific, it should be possible to draw out similarities within sectors, giving staff an immediate idea of what issues and interests are usually at play. For example, analytic work on water or electric utilities would need to consider a similar set of institutional challenges—billing and collection, collective action problems for clients, and patronage in the utility—in almost any country (see recent work on the water sector here).
- And finally, at the World Bank, country management units should make upfront and regular investments in country level analysis. This will give staff the opportunity to do a quick “first look” at national level dynamics when planning new operations. Having this material on hand will allow new staff to quickly acquire the ‘tacit’ knowledge that can otherwise take years to accumulate. It will also facilitate better responses to fast moving events—whether they are crisis or new opportunities for engagement. The new Systematic Country Diagnostic is an excellent entry point for these investments in country level political economy.
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