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. OPM has played a leading role in this development.
An OPM study has highlighted how political economy analysis (PEA) can improve the design, implementation and effectiveness of pro-poor sanitation investments and services. According to the Human Development Report 2006, an estimated 2.5 billion people lack access to basic sanitation, predominantly in low- and middle-income countries. While significant progress has been made in addressing this problem, sanitation practitioners have tended to approach the issue from a technical perspective, often overlooking how different stakeholders, along with different social, institutional and economic processes, influence each other and, ultimately, sanitation outcomes.
International development programmes often fail to achieve their objectives because they tend to treat development as a wholly rational and technocratic process, ignoring its complex and changeable political nature. Political economy analysis (PEA) is increasingly being used to provide the necessary insights but it needs to be approached differently to realise its full practical potential, according to a Development Futures paper by Richard Williams and James Copestake.