The Political Economy of Reform

A joint World Bank and Oxford Policy Management study has analysed the political economy of reform in a selection of past World Bank development policy lending and project investments. Drawing on case study material from agricultural sector reform and water supply and sanitation sector reform, the study aimed to contribute to a better understanding and management of political economy issues in the design and implementation of policy reforms.

The Political Economy of Policy Reform: Issues and Implications for Policy Dialogue and Development Operations.

Political Economy of Reform (985 kb)

Based on a desk review and interviews, the study developed a framework to assess and manage political economy issues in World Bank operations. The work looked at both institutions, as 'the formal and informal rules of the game', and at the interests and incentives of different stakeholders involved in the reform process. Government and non-government stakeholders' motivations were analysed in terms of the risk to reform posed by ideology-based or rent-seeking behaviour, and the extent to which stakeholders' interests are taken into account when designing and implementing policy reform. Elements of good practice were drawn out and developed into a set of recommendations for future political economy-informed Bank operations.

This paper presents a framework for understanding how political economy factors can present both risks and opportunities for the successful implementation of policy reform. it emphasises the significance of institutions and actors in influencing policy processes and determening outcomes, including who are the winners and losers under policy reform.