Transcript Document

Political Economy
Why good PE analysis is central to effective PSD strategies,
PPD and Investment Climate Reform
PPD Workshop, March 2014
Albena Melin and Dr. Peter Davis
What is Political Economy (PE)?
How political institutions, the political environment and the
economic system influence each other.
Includes:
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Power: who has it and why?
Ethnic, religious, tribal and other power structures
The structure of a country’s governmental institutions
The character of, and relationships between key political figures
How past events and structures impact on current policy making
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Why is it important?
• Markets and their development cannot be disentangled from
political structures, ethnicity, societal norms and other PE
issues.
• Especially relevant for M4P (a specific approach)
 Need to understand the system that needs to be changed
 PE is the system that needs to be changed
• Country strategies, programmes and specific approaches all
need to be designed
 With a clear understanding of the PE context
 With a clear understanding of how to use a PE analysis, e. g. for
better advocacy or public exposure of issues or to build
coalitions, etc.
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Market System and Political Economy
•SUPPORTING
•FUNCTIONS
•CORE MARKET
•Influence
•(Value-Chain)
•Gender
•Conflict
•Formal
•Policies
•Laws
•Informal
•Culture•“Governance”
•Market players, trading relationships, bargaining power,
“governance”
•RULES
•Structures, Institutions & Agents:
•“Political Economy”
It’s not just about avoiding problems...
• PE analysis needs to look for opportunities as well as risks
• Constraints
• What might get in the way of reforms happening and
being sustained?
• Can the analysis performed be freely used?
• Drivers of change
• What existing activities/ trends might reform build on
to make it more effective?
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PE System is Key to Change
•Results at scale. Jobs and incomes beyond immediate interventions
resulting from systemic change
•Quantifiable results: jobs and incomes
•1. Direct impact of
activities. Results captured
through robust DCED
Standard-based M&E
framework
•3. Dynamic impact of the
approach used. Exploring
evaluation processes. Qual
as well as quant eg ODI
•Systemic change
•Attitude change
•Interventions
•2. Systemic impact
of reform action.
Results captured
through intermediate
perception data at
activity level. Qual
and Quant
Azerbaijan
• The challenge of elite control
• Key industrial sectors under suzerainty of key clans
• No real opposition or civil society as counter-balance
• The challenge of resource wealth
• Can throw cash at problems that arise
• No urgency for comprehensive reform
• Can ignore advice and external pressure
• Demonstrating that change can occur
• Corruption is endemic
• Yet local chapter of EITI first to be formally validated
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– Tools
for Analysis
Click toPEedit
Master
title style
Level
Macro-level country analysis
Sectoral Analysis
Problem driven analysis
Tool
Drivers of Change (DFID)
Strategic Governance and Corruption Analysis (SGACA,
Netherlands)
Power Analysis (SIDA)
Analytical framework for Understanding the Political
economy of Sectors and Policy Arenas (DFID/ODI)
Addressing Governance in Sector Operations (EC)
Political Economy of Policy Reform (World Bank
SDD/OPM)
Policymaking Process Framework (IDB)
Problem-driven Governance and Political Economy
Analysis (World Bank)
Designing PE into Activity /Programme Planning
1: Stakeholder mapping and
analysis
5: PE dashboard
2: Map PE –
Integrating
People and structures
PE
4: Selection and use of appropriate
tools
3: Map PE – contextual pressures
Stakeholder Mapping
Government,
politicians and
parties
CSOs
Functionaries
and
technocrats
Private sector
companies and
BMOs
Wider public
and others
Media/
Commentators
© Green Lion Management 2012
PE – people and structures
• Political leadership
• Who is in charge and why?
• What are their interests and power relationships?
• Technocrats
• What are their vested interests in the status quo?
• Are they capable and competent?
• Civil society
• How to build demand for reform?
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PE – Contextual pressures
• Proximate/ trigger causes
• What immediate factors are there that might trigger or stymie
reform?
• External pressure
• How can pressure for reform be brought to bear; by whom and
on whom?
• Reform synergy
• How can reforms be timed to overcome resistance?
• How to win friends and influence people
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PE tactics and approaches
• Generating and sustaining political will:
• What arguments and reasons will persuade a wide group of those
in power to support and enact reforms?
• Widening the groups of reformers
• Building coalitions for reform:
• Mobilise different groups to provide unified pressure for reform
• Looking at public sector reforms:
• What public sector reform may be needed?
• Prioritising reforms:
• Plan reforms to marginalise potential critics
• Stakeholder management:
• Manage stakeholders and their expectations
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Fieldcraft
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Talk to specialists in other disciplines
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Use the business environment itself as a diagnostic
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Observe and listen
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The need for continual evaluation
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Develop a network
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Remember the art of the possible
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The problems of staff rotation and need for proper hand-overs
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PE Dashboard
Click to edit
Master title style
Issues
Political
leadership
Constraints
Technocrats
Constraints
Drivers
Drivers
Civil society
Constraints
Drivers
Proximate/
trigger causes
Constraints
External
pressure
Constraints
Reform synergy
Constraints
Drivers
Drivers
Drivers
Actions
Formalisation
Kanostyle
ClickLand
to edit
Masterintitle
Political
leadership
Issues
Actions
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Governor and Commissioner of Lands both
strong advocates
Willingness to use proportion of registration
revenues to provide specific community
benefits
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Maintain strong engagement to ensure their
continued support
Ensure that these benefits are delivered –
leverage media and other pressure if required
Technocrats
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The core Land Ministry staff are the major
potential obstacle.
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Ensure swift delivery on the registration
intervention in order to keep these people
marginalised.
Civil society
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Current links with CSOs are weak and need
to be strengthened
We lack clear understanding of what would
drive formalisation
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Build good relationships with CSOs and BMOs to
better understand the drivers for registration
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Need for IGR not seen by all as requiring an
improvement in delivery of services
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Delivery, delivery, delivery
Reform
synergies
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Success in initial locations could drive
demand in others
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Ensure success is widely publicised, for example
in the media
External
pressure
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The rivalry with Jigawa and Lagos means
that reform developments here are likely to
be an incentive in Kano
Willingness to learn from reform
programmes in other countries
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Ensure that progress in these states is monitored
and used as leverage in Kano
Identify suitable examples from other countries
that could be used in Kano
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Crisis
proximate
drivers
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Tax Reform in Cross River State, Nigeria
EXERCISE:
reform
in Crosstitle
River style
Click to•Tax
edit
Master
Issues
Political
leadership
Constraints
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Behaviours
councillors
Actions
of
LGA
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Crisis
Drivers
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Head of BIR and LGA
Chairman both strong
advocates
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Maintain strong engagement to ensure their
continued support
Constraints
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Need for increased IGR
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Understand better the distorting effect of tax
complexity through a detailed study of taxes/
charges currently levied, their adverse impact,
and the potential for growth if the situation
changes
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Undertake a detailed study of what services
people would most welcome, and therefore
the provision of which would be popular
leads to greater use of
nuisance taxes
Reform
synergies
Engage with them to understand their
position better
Seek ways in which their capabilities and
ability to do their job might be improved
Drivers
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Example of flat tax in
Lagos
reform
in Cross River
Click toTaxedit
Master
title style
Civil society
External
pressure
Issues
Actions
Constraints
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Currently civil society is weak
and therefore not a great force
for reform
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Work with Enable to establish and
grow good CSOs
Drivers
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New arrangement for CSO
management may change things
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Monitor new arrangements
understand actual impact.
Drivers
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Need for IGR
Comparison with Lagos
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Ensure that increased IGR is not
leading to increased use of coercion
Use Lagos example as basis for
comparison
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Technocrats
Constraints
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Potential
for
rent-seeking
behaviour
Are revenue collectors properly
trained and skilled for their job?
Use of ‘heavies’ accompanying
revenue collectors
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Need to regularise taxes and levies in
by-laws
Explore training for revenue
collectors?