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There is growing recognition among donors of the importance of understanding the political, economic and social processes that promote or block pro-poor change, and to understand the role of institutions, power and the underlying context in developing countries. The need for this has been reinforced by the ongoing reform of the ways aid is delivered and managed. This includes not only the shift towards increased country ownership, alignment of aid with partner countries’ priorities, systems and procedures, and the move from project to sector and budget support. There is also an expectation that sound analytical work might provide a firmer footing for the harmonisation agenda and more common ground for joint donor initiatives. This is particularly important where donors are moving towards Joint Assistance Strategies.

Political economy analysis played a key role in contributing to this shift. An increasing number of donors are using political economy analysis or adopting its findings in their search for partner country-led incentives for progressive change and to better understand the political factors that shape development challenges and outcomes, in particular the underlying causes of poor governance. A variety of approaches to political analysis are being developed, reflecting the different perceptions and operational concerns of different donors. But while there is by now a high level of shared understanding about the problems, there is significant variation among donors in understanding of, and approaches to, development and the best means to address them.

The GOVNET started in 2004 to address these issues. As a first step in a longer process, a workshop on “Sharing Approaches to Understanding Drivers of Change and Political Analysis” (Agenda, Summary Record) was held in June 2004 with the goal of acquainting members with the variety of approaches, considering the broader implications of political economy work for the nature and design of assistance programmes, and how to take this agenda forward in a more harmonised way.

Participants were supportive of taking the agenda forward through GOVNET so that in 2005-06, political economy analysis ranked among the network’s highest priorities. This work led to two chief outputs. First, the study Lessons learned on the use of Power and Drivers of Change Analyses in development co-operation compares and contrasts different donors’ approaches to political economy analysis with a view to identifying similarities and differences in focus and approach, and shows how the findings are being used. Secondly, a GOVNET Lessons Note reflects how donors are undertaking political economy analysis, how they are using the findings to improve aid effectiveness. For practitioners it brings together some lessons for successfully planning and undertaking such analyses.

For the new 2007-08 GOVNET work programme it was decided to pause doing new work on political economy analysis and to continue with an informal networking mechanism with a view to facilitate

• interaction of political economy analysis with the aid effectiveness agenda and new aid modalities
• inks between political economy work and other items on GOVNET’s programme of work, e.g. joint corruption and governance assessments and discussion of state-society dynamics around tax and public expenditure issues
• docking political economy work into the wider donor community through other DAC subsidiary bodies such as those working on aid effectiveness and aid to fragile states, conflict management and security, and poverty reduction to share updates and experiences
• sharing of evidence and experiences from the field.

Related documents:

Power Analysis – Experiences and Challenges (Sida Concept Note)

The Politics of Policies – Economic and Social Progress in Latin America. 2006 Report (Inter-American Development Bank)