Public group: Political Economy in Practice

Using The Political Economy Analysis to Improve EU Development Effectiveness_DRAFT



This background paper has been prepared as part of a broader DEVCO exercise to bring together existing guidance on development practice into one harmonised document, the Project and Programme Cycle Management (PPCM) Guidance. The concept paper explains what is meant by political economy analysis, why it matters fundamentally for understanding development challenges and outcomes, and the implications for donors. It also offers practical guidance on how to undertake political economy analysis at country and sector level, and suggests how to draw on the analysis to inform every aspect of EU development activity, including programming, identification and formulation of specific interventions, risk management and policy dialogue.

 The background paper is complemented with two annexes that present political economy analysis tools to be used at country and sector level. These will be posted shortly on capacity4dev. We will also be discussing the pilot testing of the tools for EC Delegation in Zambia.

We are inviting comments on the background paper through the capacity4dev website.  In particular we would like to hear your views on the following:

1)      Do you agree or disagree with the concepts and ideas presented in the background paper? Is it based on a realistic theory of change about how development happens and how development agencies can support this?

2)      How useful do you think that the analytical framework will be in helping development agencies to work more effectively? In your own areas of work are there examples of where a political economy approach would be useful for improving development effectiveness?

3)      How should development agencies be using political economy analysis?  What are the challenges in adopting political economy analysis tools, and how can these be addressed?


Overview of the background paper:

Section 2 explains the key concepts underpinning political economy analysis. This theoretical perspective matters because the most important contribution that political economy analysis can make to increasing aid effectiveness is to help donors think more clearly about how development happens, and about the local processes with which they are engaging when they give development assistance.

Section 3 explains why political economy analysis is needed and how it poses new challenges and opportunities for development practice.

Section 4 looks at how to draw on analysis in making operational choices at country and sector level, based on the practical experience of EU Delegations and other donors; and how it can help inform risk assessment and policy dialogue. 

Section 5 explains the range of political economy analysis tools available, and introduces two approaches that can be used to undertake analysis at country and sector level. Detailed guidance is given in the annexes.

Section 6 covers practical aspects of undertaking political economy analysis including timing, resource requirements, sources and research methods and advice on managing the process. It also suggests next steps needed to build ownership for political economy analysis within the Commission.

Type of document: Guidance;