Corruption and Political Economy Assessments more

EuropeAid Political Economy Analysis: Approaches and Challenges Scope EuropeAid ‡ Why PEA? Why now? ‡ What is being done ‡ Domestic and international PEA Findings ‡ Issue-focused versus problem-focused PEA approaches ‡ Challenges for PEA Why Political Economy Analysis (PEA)? ‡ Too much focus on input, spending and technicalities and less on results; ‡ Aid and the cost of corruption ‡ Critical importance of political economy analysis in new aid modalities (fiduciary and development risks) ‡ Governance is crucial for sector development and outcomes and thus for efficient service delivery. ‡ Governance already at the heart of EC cooperation strategies ‡ Governance as a recurrent subject in EC political and policy dialogue with partner countries ‡ Challenge lies now with implementation « EuropeAid MAKING THE ICEBERG VISIBLE EuropeAid Why PEA? Why now? EuropeAid ‡ µDespite decades of technical and prescriptive efforts, a lack of concrete achievements have been recognised by donors, partner countries and academics alike¶ (Chabal, 2009). EuropeAid The µprimacy of politics¶? ‡ µThe central and dominant variable determining not only the conception and shape of development, but developmental success or failure in societies, is their politics¶(Leftwich, 2000). Bankruptcy of best practice in the field EuropeAid ‡ Donors are increasingly recognising the failure of technocratic solutions lacking in country/specific context and the importance of politics. ‡ The World Bank now recognises the importance of PEA, despite its non-political mandate: µA political economy lens broadens operational considerations beyond technical solutions to include an emphasis on stakeholders, institutions and processes by which policy reform is negotiated and played out in the policy arena¶ (World Bank 2008). What is being done? EuropeAid ‡ Donors aspire to increase politically informed understandings of development, viewing politics as the µdriver of change¶ (DFID, 2010) ‡ Newfound emphasis upon context-specific relationships between the political and the economic: ³the interaction of the political and economic processes in a society; the distribution of power and wealth between groups and individuals, and the processes that create, sustain and transform these relationships over time´ (Collinson, 2003). EuropeAid Domestic PEA findings ‡ Early DFID findings: Corruption, elite capture (of power and resources), the role of civil society and relationships with external actors (DFID, 2005) ‡ Further donor findings centre upon the critical nature of relationships between formal and informal institutions ‡ Despite the presence of formal state structures, informal actors and institutions found to supersede these structures EuropeAid Formal Photo: Heather Marquette Informal Photo: Kevin Tunoi/Standard EuropeAid International PEA findings ‡ PEA has recognised the role of µinternational drivers¶ upon elite behaviour, patterns of corruption and overall levels of development: µbad governance is often caused or exacerbated by the ways in which poor countries interact with global economic and political forces, powerful and richer countries and large transnational private enterprises¶ (DFID White Paper, citing Moore and Unsworth,2006). PEA Findings (cont¶d) ‡ More recent findings suggest that the global political and economic system has created a perverse set of elite incentives EuropeAid ‡ Elites faced with huge incentives to enrich themselves by securing rents e.g. controlling rents to natural resources ‡ Elites less incentivised to participate in nationbuilding and/or a social contract ‡ Perverse incentives are far from conducive to development (Moore and Unsworth,2009) Issue-focused versus problem-focused approaches EuropeAid ‡ µMeta-level¶ in the form of country level, e.g. Drivers of Change ‡ Well received, but not easy to operationalise; how many PEA studies are there gathering dust on shelves? ‡ Recent variation in the form of problem-driven PEAs- focus upon specific problem/sector ‡ Recent recognition of important of political context, e.g., recruiting drive for PEA Community of Practice ‡ World Bank menu of products enables PEA at country, sector and project level ‡ EC Sector Governance Analysis Framework ‡ Easier to operationalise, but may miss structural impediments only evident through wider analysis Challenges EuropeAid ‡ Minimal sharing of PEA findings, within donor community and with the host nation o However, not always easy or practical to make public ‡ PEA findings not reflected in donor activity and practice, despite growing recognition of the importance of politics ‡ In spite of PEA findings, the incentives remain for donors to continue to pursue primarily technocratic, prescriptive trajectories ‡ Donors continue to employ technical experts rather than political specialists ‡ Agencies remain fundamentally political (Unsworth, 2008) What¶s the added value of such analyses? What can you not expect«.? ‡ Helps identify domestic drivers, understand incentives and target obstacles to change ‡ Cannot push through externally driven political agendas ‡ Assess feasibility of reforms and levels of ambition (good enough governance, next best institutions, etc.) ‡ Cannot generate quick fixes or short cuts ‡ Analyse risks in a more comprehensive way, including the risks of doing business as usual, or stopping aid ‡ Cannot take away these risks ‡ Calibrate response strategies over demand and supply side actors ‡ And improve the timing and sequencing of such interventions EuropeAid SOME QUESTIONS FOR DISCUSSION ‡ HAVE YOU WORKED WITH POLITICAL ECONOMY ANALYSIS TOOLS? IF SO, DID THEY MAKE A DIFFERENCE? ‡ WHAT ARE THE MAIN CHALLENGES/LIMITATIONS ENCOUNTERED IN APPLYING THIS APPROACH, PARTICULARLY WITH PARTNER GOVERNMENTS? ‡ OPERATIONAL TOOLS? WHAT SUPPORT DO YOU NEED, IN WHICH FIELDS ? EuropeAid