Political Economy Analysis – A step forward for social accountability and development, or three steps back? Part II
In a previous post, I argued that mainstream PEA has limited our understanding of how to achieve better governance and development outcomes. In part, this limitation arises from their Public Choice Theory (PCT) premises, which assume that all individuals and their decisions are motivated by incentives or expected payoffs; positive incentives reward those who comply with institutional rules and negative incentives punish those who don’t. What mainstream PEA offers, then, is a focus on how politicians, bureaucrats and civil society actors respond to incentives created by formal and informal institutional rules.
But what PEA does not offer is a systemic understanding of the processes that are required in order to make socially accountable governance institutions work in the first place. I argued that for institutions to be effective and for public policies to be successfully implemented in ways that address priority needs and rights, requires public resource management processes.
Even if you subscribe an analysis that focuses on individual and group self-interests, the only way in which politicians can ensure the provision of public goods and services that meet the interests of “special interest groups” is through the manipulation of these public resource management processes. For this reason, even from the point of view of mainstream PEA you still need to explain what happens within these processes in order to understand development challenges. You need to be able to investigate and explain capacities, as well as contestation, within each process. This includes: how bargaining between competing interest groups is conducted through needs assessment and policy making processes; how priorities are negotiated within strategic planning processes; how special interests are met by resource mobilisation (including revenue collection) plans; how resource are allocation (budgeting) ends up serving special interests; how revenue collection and expenditure and performance are managed in ways that serve selected interests (including those of bureaucrats); who benefits from the way corrective and preventative action are taken or not taken; and finally, how auditing and oversight are undertaken and whether this reproduces or challenges vested interests.
Each of these processes (or sub-processes) represents a site of engagement between competing interest groups seeking not only to maximise their welfare, but also to realise their concerns and needs. Each is a site of contestation and negotiation; whether by non-decision making, the exclusion of potential decisions, or the active and transparent domination of decision taking by powerful interest groups. Without an understanding of the role played by these processes we are left with a model of governance and development that is made up of institutional rules on the one hand and self-interested economic individuals and interest groups on the other; with nothing in between. We are left with no insights into the sites at which this contestation over public resources takes place.
PEA, following PCT, assumes that if governance institutions aren’t working it must be because people lack the necessary incentives and payoffs to comply with institutional rules.
But institutions do not simply consist of rules. They are made up of roles. And the ability of institutional actors to perform their roles in a socially accountable fashion is not simply a matter of incentives. It is a matter of having the capacity to explain and justify the use of resources to meet priority needs (by supply actors), to engage with the evidence base for these explanations and justifications (by demand actors) and to ensure corrective action where they don’t.
We need a framework for analysing the relationship between these capacities, processes and institutions. We need to test theories of change which offer tools for building these capacities in ways that make processes more socially accountable and which enable institutional and policy effectiveness.
We also need a framework that can analyse the relationships between these processes and bureaucratic and governance institutional arrangements across tiers of governance. Do these institutional arrangements enable or constrain social accountability processes? Is the system integrated? Or does it breakdown between levels of government?
I don’t see how mainstream PEA and its game theory models bring us any closer to the development and testing of coherent theories of change for how to strengthen systems of socially accountable governance and development (including institutional arrangements, social accountability processes, and the capacities of state and non-state actors).
By contrast, I think that the process-based Social Accountability Monitoring and Evaluation (SAME) framework and indicator set provides a coherent and testable theory of change for evaluating development and governance challenges. It provides a basis for diagnosing capacity constraints, for analysing the influence of vested interests and for recommending programme interventions. The pilot application of this framework in the health sector in Mozambique in 2013/14 (supported by SDC) pointed to the way in which powerful interest groups had influenced the degree of social accountability of key processes and limited institutional effectiveness.
For one thing, the ruling party insistence that its electoral manifesto constituted the equivalent to a needs assessment certainly contributed to the failure to undertake a rigorous health needs assessment process. Secondly, donor insistence on predominantly epidemiological indicators in the Mozambican health SWAP had the unintended consequence of a curative emphasis within expenditure reporting, performance reporting and oversight processes.
But, even if these political “incentive structures” were to change (with the ruling party giving approval to rigorous bottom-up needs assessment and health planning processes, and if donors balanced the inclusion of preventative and curative performance indicators within the health SWAP, this would not change existing process capacities. Nor would it address the lack of systemic integration of processes across tiers of governance.
For instance, there was no capacity of supply actors to include narrative explanations of their performance at any of the 7 health sector pilot sites (which spanned all 4 tiers of governance). This placed obvious limits on the ability of demand actors (CSOs) and oversight bodies to engage with performance and advocate for corrective action. Similarly, the lack of capacity to undertake programme based budgeting, together with this absence of programme based performance reporting, had a negative effect on the capacity of the health sector (across tiers of governance) to engage in effective risk management. This in turn not only undermined corrective action but weakened oversight processes.
The point is that the capacities of actors within each of these processes places real limitations on the implementation of health policy in Mozambique. What the SAME framework shows is that ultimately these supply and demand capacities, and the relative powers of vested interest groups within the state and society, along with the influence of institutional rules and roles, converge to form an emergent power that enables or constrains socially accountable policy outcomes. These outcomes can’t be predicted or explained by the self-interested pursuit of payoffs by individual policy makers and actors or by using the limited tools of mainstream PEA.