Political economy analysis

Understanding the interests and influence of different stakeholders and how their power is exercised within a particular institutional context is central to effective policy implementation and the design of development interventions. As a result, political economy and institutional analysis is increasingly being used by donors, particularly in the design of projects and programmes to address specific sectoral problems.

A powerful application of the approach is in testing the explicit and implicit assumptions about the influence and interests of stakeholders (and the way that power is exerted in a specific institutional context) that underlie proposed development interventions. This analysis can then be used to design interventions that are both more likely to succeed and that can monitor and address more effectively potential implementation risks.

Leading role: OPM has played a leading role in the application of political economy analysis to the design of development interventions, including carrying out the first DFID Drivers of Change study in Bangladesh in 2001 and several subsequent studies, and making significant contributions to developing the Drivers of Change framework. Other advances have ranged from preparing a handbook on tools for institutional, social and political analysis (TIPS) in Poverty and Social Impact Analysis (PSIA) for the World Bank to developing new methodological approaches with Bath University. In addition we have conducted numerous PEA studies in countries across the globe, such an analysis of policy making and service delivery in agriculture, hydropower, health and policing in Nepal for DFID.

An holistic approach: Our approach to political economy analysis is characterised by the following features:

• The application of a deep and broad understanding of politics and development through engagement with the academic and policy research literature and the experience of staff.
• The selection of methodological tools appropriate to a particular context and purpose from a wide range of disciplinary sources and approaches.
• The ability to combine international and national expertise on sectoral policy and institutions with political knowledge and analysis, through assembling and effectively managing multinational and multidisciplinary teams.
• The ability to obtain, and to present, information about potentially sensitive issues with tact and sensitivity to the cultural and political context and the needs and priorities of clients.
• A belief that the value of this analysis is greater the wider that is shared and the more it is used to stimulate public debate as well as frank and open discussion between aid recipients and their development partners.