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. OPM has played a leading role in the application of political economy analysis to the design and delivery of development assistance. We are seeking to mainstream these approaches and the insights they provide throughout our work. At the same time, we are able to apply our experience and expertise to provide a distinctive approach to carrying out political economy analysis of specific problems for clients.

The potential of political economy and institutional analysis has now been widely recognised and is increasingly becoming incorporated into donor practice, 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.

OPM has played a leading role in the application of political economy analysis to the design of development interventions. OPM carried out the first DFID Drivers of Change study in Bangladesh in 2001 and several subsequent studies, and made significant contributions to developing the Drivers of Change framework. OPM also carried out studies of the political economy of budgeting in Mozambique and of agricultural policy in Kenya. OPM prepared a handbook on tools for institutional, social and political analysis (TIPS) in Poverty and Social Impact Analysis (PSIA) for the World Bank and undertook studies of the political economy and institutional determinants of policy reform in different sectors that resulted in the development of the World Bank’s Political Economy of Policy Reform Framework. OPM subsequently led the Framework’s first application to analyse the political economy of pro-poor sanitation investments in four countries. More recently, when DFID incorporated political economy analysis into its project design process, OPM carried out some of the first studies to apply this approach. We are currently working with Bath University on developing new methodological approaches while also seeking to mainstream political economy and institutional analysis into our project design and implementation for clients.

Our recent experience includes studies of the political economy of policy making and service delivery in agriculture, hydropower, health and policing in Nepal for DFID, of the political economy of disaster risk management for UNDP, of the political economy and institutional context for World Bank support to gold mining in Burkina Faso and to results based financing in health in Nigeria. We have used political economy analysis in developing a strategy for financial inclusion and access to financial services in rural Rwanda.

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.