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GIZ Professional Forum on ‘The Political Economy of Health and Social Protection’ 2011 Making GIZ Professional Forum on ‘The Political Economy of Health and Social Protection’ 2011 Making development co-operation work better by using political economy analysis: what has been done and what have we learned?

What is political economy? “The interaction of political and economic processes in a society: What is political economy? “The interaction of political and economic processes in a society: the distribution of power and wealth between different groups and individuals, and the processes that create, sustain and transform these relationships over time”

Why does it matter? • Theory and practice of development agencies ignored politics --- Why does it matter? • Theory and practice of development agencies ignored politics --- challenge seen as technical and financial – and as capacity. • But too much did not work well, especially in poorest countries; needed to change • Rationale for PE analysis therefore is development effectiveness and aid effectiveness; and (post 9/11) fragile states, conflict, state-building

What has been done? • From 2002: DFID, NL, SIDA, World Bank, US (democratic What has been done? • From 2002: DFID, NL, SIDA, World Bank, US (democratic governance) • Various approaches and ‘brands’ (Drivers of Change, Power and Change Analysis, Power Analysis, Problem-Driven Governance and PE) • Methods of analysis diverse (but shared core) • Three levels --- sequenced – Country-level / macro (links to international) – Sectoral / thematic (e. g. growth) – Problem-focussed (includes aid modalities)

Five core issues recur (illustrated by Bangladesh, Nigeria) 1. History of state formation, and Five core issues recur (illustrated by Bangladesh, Nigeria) 1. History of state formation, and state-society relations (aid is a small player) 2. Political competition and the distribution of power 3. Formal and informal institutions, incentives and relationships 4. Sources of revenue and accountability 5. The causes and effects of violent conflict

Where can PE add value? (1) Thinking: not just the what, but the why? Where can PE add value? (1) Thinking: not just the what, but the why? • In the two countries, some progress in PEA becoming a routine tool; analytical and programming documents: country strategies (context analysis); Country Governance Assessments (PE asks Why? ) • PEA extended to some programme contractors (Nigeria State-Level) and other development agencies (joint analysis in Bangladesh) • Agencies reflect how to achieve influence in context of low aid dependence where donors’ leverage is limited. • Broader thinking about how to support progressive change (more than just ‘demand-side’ and ‘supply-side’) -- longer term, structural • More realism about the difficulty of bringing about transformative change • Engagement with a wider range of organisations across and outside government

Where can PE add value? (2) Strategy: looking for ways to promote change that Where can PE add value? (2) Strategy: looking for ways to promote change that shift incentives in a pro -developmental direction • Focus on accountability and ‘voice’, alongside capacity development (Nigeria State programmes; shift also in Bangladesh, although still largely focussed on capacity) • Broadening types of intervention: new actors (more on national and state Assemblies, parties) and civil society, media (more on advocacy and not just service delivery) • Issue-based approach; promoting coalitions for change • Link development to diplomacy (elections in both countries), law enforcement / sanctions for corruption • More on violent conflict (incentives of participants) • Shifting incentives in natural resources , using markets (EITI, FLEGT) • Time-scales

Where can PE add value? (3) Operations: from supply-driven (financial and technical) assistance to Where can PE add value? (3) Operations: from supply-driven (financial and technical) assistance to how can aid contribute to feasible change? Progress is halting, but there is some: • Nigeria new programmes influenced by 2003 -05 Drivers of Change: capacity paralleled by accountability (private sector; ‘Making Markets Work’; state level sector programmes seen as governance) • Bangladesh, more on demand-side governance programmes (e. g. multidonor Paribartan: Driving Change programme; Manusher Jonno challenge fund for governance and rights of poor people; 20 -year public expenditure programme shifts • Supporting long-term structural socio-economic change (women’s education, middle-class. . . ) • Agencies may be working more closely together: – Designing and implementing interventions (fewer larger, less purely technical) – shared donor understanding (joint analysis); but trade-offs – Co-operation among the agencies is mixed (internal incentives!) – joint country strategies; but also risk of blandness.

Overall impact of PE analysis? • Overall, possible to discern effects at each level, Overall impact of PE analysis? • Overall, possible to discern effects at each level, but uptake not complete, and areas where greater progress needed • Even if design and implementation are more soundly based, what about impact on poor people, development/aid effectiveness? – We don’t know; evidence not (yet) collected

Conclusion • It’s a process; progress is being made (DFID was a ‘project machine’) Conclusion • It’s a process; progress is being made (DFID was a ‘project machine’) • No going back to ‘ignoring’ politics • Incentives are problematic – Staff are scarce – How to reconcile with demand for measurable results?