Understanding the Alternative Perspectives on
Policies and Policy Choices: The Political
Economy
AGEC 422
Political Economy
What is Political Economy Analysis (PEA)?
PEA – concerned with interaction of political and economic processes in
society: the distribution of power and wealth between different groups and
individuals, and the processes that create, sustain, and transform these
over time.
• [E.g. Marginalization of the Matabeleland Regions]
Definition draws particular attention to:
• Politics – understood in terms of contestation and bargaining between
interest groups, with competing claims over rights and resources.
• Economic process – that generate wealth and that influence how political
choices are made.
• Politics – the process of conflict, negotiation and cooperation between
interest groups in the use, production and distribution of resources.
PEA (cont’d)
Incentives – are the driving force of individual and organized group behavior.
• They depend on a combination of : (i) the individual’s personal motivations (material gain, risk reduction,
social advancement, spiritual goals etc.), and (ii) the opportunities and constraints arising from the individuals
principal economic and political relationships.
Interest groups – where individuals or organizations have similar aims and face similar incentives they may be
recognizable as a distinct interest group.
Institutions
• The rules, norms and conventions governing human interaction.
• Institutions may be formal in the sense of constitutional rules, codified laws, and bureaucratic rule books, or
informal in the sense of social and cultural norms.
• PEA pays particular attention to the informal norms that underpin social hierarchies, create and perpetuate
power structures, and generate reciprocal obligations.
• In settings where formal institutions are weakly embedded and enforced, informal norms often explain how
things really get done.
Patronage politics or patron-client relations
• A political system where the holders of power (patrons) seek to maintain their position by directing privileges
at particular individuals or groups (clients) in a manner that is intended to strengthen political support and /or
buy off political opponents.
• Patronage politics is a common explanation of why governments often direct resources at narrow groups of
beneficiaries rather than the public good.
Collective action and change coalitions
• PEA often describes a set of intractable problems where development is blocked by powerful interest
groups. Change is unlikely to occur unless groups with a shared interest in reform work together for
change.
• Collective action refers to the pursuit of a common goal by more than one person.
Political Settlement
• This phrase refers to the forging of a common understanding of a country’s elites that their interests are
served by acquiescing to a particular form of state.
• The presence or absence of s political settlement is the principal factor determining the stability of the
state and feasibility of state-building processes.
Rent and seeking
• This refers to income generated by privileged access to a resource or politically created monopoly rather
than productive activity in a competitive economy.
• Some political systems revolve around the creation and allocation of such incomes – hence rent seeking.
PEA (cont’d)
PEA – helps us to understand:
• What drives political behavior?
• How this shapes particular policies and programmes?
• Who are the main winners and losers?
• What the implications are for development strategies and programmes?
Specifically it is concerned with:
• The interests and incentives facing different groups in society (particular
political elites) and how these generate particular policy outcomes that may
encourage or hinder development.
• The role that formal institutions (rule of law, elections) and informal social,
political and cultural norms play in shaping human interactions and political
and economic competition.
• The impact of values and ideas including political, ideologies, religion, cultural
beliefs, on political behavior and public policy.
PEA (cont’d)
What are the main approaches and tools for conducting political
economy analysis?
3 Major uses of PEA can be distinguished:
1. Macro-level country analysis
• Broad political environment
2. Sector level analysis
• To identify specific barriers and opportunities
3. Problem-driven analysis
• Resolving particular problems in relation to specific issue.
PEA (cont’d)
Levels of PEA
1. Macro-level country analysis
• For general sensitization to country context
2. Problem-driven analysis
• For illuminating a particular problem of policy or operations
3. Analysis focused on a sector or cross cutting issue
• For identification of specific barriers and opportunities.
PEA (contd’)
Country level analysis
• Structure e.g. social structures
• Institutions
• Agents
Sector level analysis
• Approach – Drivers of change
• Tools e.g. EC’s Analysing Governance in Sector Operations
• Stakeholder Map
• Questions to guide PEAs
Problem Driven Analyses
• Distinguish 3 layers
• Identifying the problem, issue or vulnerability to be addressed.
• Mapping out the institution and governance weakness which underpin the problem.
• Drilling down to the political economy drivers which constrain or support progressive
change.
The Analytical Framework
Stages in Political Analysis
Stage 1
Basic country analysis
Historical/Foundational country analysis
Stage 2
Understanding organizations, Institutions and actors
History, Change processes, Structural features, Power ideologies
Stage 2A Stage 2B Stage 2C
Defining the sector Intra-sector analyses Relationships between players
Determining sector boundaries Role & responsibilities How players influence the
Mapping the players in the sector Original structure policy process
Management & leadership Policy formulation, negotiation
Planning & spending and implementation
Incentives & motivation Responsiveness and channels
Capacity of accountability
Stage 3 Operational Implications
Stage 3A Stage 3B Stage 3C
Defining objectives and expectations Determining entry points Identifying mode of support
Reading assignment
Read the handout on the e-learning platform
#Political economy analysis How to note
Group Assignment
To be presented next week during the Tutorial
Using the DFID framework in the handout, conduct a political economy
analysis of Zimbabwe’s agricultural sector to inform donors that intend
to work with the Government of Zimbabwe.
