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Political Economy Analysis – A step forward for social accountability and development, or three steps back?
Part I

Colm Allan

Political Economy Analysis (PEA) is the latest buzz concept in social accountability (SAcc) circles and in development policy. Donors are all rushing to apply it to their programming. Civil society groups are clamouring to include it in their funding proposals. But what is it? And how does it take governance and development practice forward? My concern is that it may not. It may in fact detract from a systemic focus, which is needed to solve governance and development challenges.

Let’s be clear, mainstream PEA is underpinned by Rational Choice Theory (RCT) and represents an extension of the same narrow premises that have informed economic models of development policy for decades. The starting point is the assertion that all humans are rationally self-interested actors. The “minimal government” approach in the 1980s took this quite literally as the grounds for arguing that there was little need for government; if left to themselves, competition between these self-seeking actors leads to economic growth. All that people need are a few negative rights to protect their individual freedoms (primarily from state interference). New Institutional Economics (NIE), which is based on RCT, modified but didn’t challenge this argument when it came on the scene in the 1990s and insisted that government institutions are indispensable for economic growth. They provide the “rules of the game” needed to protect private property, to enforce contracts, exchange information and ensure cooperation between these competing self-interested actors.

Public Choice Theory (PCT), however, which spawned mainstream PEA in the late 2000’s, takes the RCT argument to its logical conclusion. PCT asks: What do you expect; If all people are self-interested then politicians and bureaucrats must be self-interested too. If we want to understand why they take decisions, choose to implement or bypass policies or institutional rules, then we need to understand their incentives or expected “payoffs”. PCT simply shifts the focus from institutional rules to the reasons why rules aren’t implemented; rent seeking (lobbying activities intended to obtain special privileges from government such as restrictions on imports, protective tariffs etc.), special interest groups, logrolling (vote selling), pork barrel legislation (securing local investments for vocal interest groups with costs that are met by national or federal governments), and other Machiavellian efforts at getting re-elected.

The timing of the emergence of PEA is worth thinking about. PCT and its economic modelling of self-interested political behaviour has been kicking about in development policy backrooms since the 1960s. But PEA seems to have gained mainstream credence after the global financial crisis of 2007/2008 (with a significant drop in aid volumes between 2005 and 2007). Was this mere coincidence? Is it also just a coincidence that the focus of mainstream PEA is problem (or issue)-based instead of trying to understand the systemic basis for effective governance in developing countries? Was it purely fortuitous that, around 2009, when the first mainstream models of PEA began to emerge, the goal of good governance and development was scaled back to “good enough governance” and the focus shifted from securing the optimal conditions for development to finding “politically feasible” solutions to aid programming “problems”?

This could all be interpreted as a convenient way for donor countries to back-out of previous commitments (including the Paris Declaration, and Accra and Busan High Level Summits) to align their aid with the strengthening of domestic governance institutions and public finance management systems. Will the increasing influence of PEA herald a shift back to project funding rather than institution building and harmonised programme support? A trend has already been reported in countries like Mozambique where donors are reverting to individual project funding. Perhaps a political economy analysis of the emergence of mainstream PEA itself is needed?

This said, perhaps the real danger of the mainstream PEA approach to socially accountable governance and development policy is the risk it runs of throwing out the baby with the bathwater. What PEA helps encourage, which I welcome, is a focus on vested interests and how these help explain the implementation or bypassing of formal institutional rules or their subversion and substitution by informal rules. What it doesn’t offer is any understanding of the underlying processes that are required in order to make socially accountable governance institutions work in the first place.

My question is: What if human development is not just about facilitating people’s ability to engage in economic activity and to access markets? What if people have basic sets of human needs -needs for flourishing and functioning, and not just physiological needs? What if they are driven by concerns to meet these needs instead of being pre-programmed to pursue self-interested payoffs? What if there is something else, aside from institutions, and compliance with institutional rules, that explain the success or failure of governments in progressively realizing people’s basic needs and their positive rights? I think there is. For public policies to be successfully implemented in ways that address priority needs and rights requires public resource management processes that enable institutions to translate policies into services that meet citizen’s needs.

These processes include (although they may not be limited to):

  • assessing what people’s priority needs are (including their physiological, functioning and flourishing needs) and developing policies to achieve them
  • grouping activities and programmes together into strategic plans to meet these needs
  • planning to gather the resources necessary to fund these strategic plans
  • allocating resources to plans
  • collecting revenues
  • controlling and reporting on spending
  • controlling and reporting on performance in implementing plans
  • taking preventative and corrective action to ensure resources are used effectively to meet needs
  • auditing effectiveness and exercising rigorous oversight

Without these processes, and more specifically, without building the capacity to render these processes socially accountable, there is no way of reliably transforming available public resources into goods and services that meet human needs and rights. What do you think? Do you agree with this analysis of mainstream PEA approaches? In my next post, I will go on to explain an alternative approach to improving governance and development outcomes. This approach includes a focus on institutions, processes and the capacities of supply and demand actors, as well as their vested interests and power relations between them. Let’s keep this discussion going!

About the Author

Colm Allan

Colm Allan is a research associate at Rhodes University, South Africa, and an independent consultant specialising in social accountability monitoring and evaluation. He has been involved in applied social accountability monitoring work for the past 17 years, founding the Public Service Accountability Monitor in 1999 and the Centre for Social Accountability in 2006 (both at Rhodes University). He conceptualised and developed a five-process based approach to social accountability, which has subsequently been adopted by numerous civil society organisations engaging in social accountability monitoring and advocacy across Southern Africa. Since 2012 he has been developing a set of process-based social accountability monitoring and evaluation (SAME) indicators. These were piloted in Mozambique in 2013/2014.

2 Responses on Political Economy Analysis – A step forward for social accountability and development, or three steps back?
Part I"

  1. Thembile says:

    Interesting analysis. While I agree that PEA may not have a systemic focus I would argue that the outcomes of PEA approach may also result in systemic change. E.g. Based on adept PEA, CSOs can influence legal, policy and institutional reform which ultimately is systemic. I am also not sure what the alternative is-isnt it the case that as long as you have institutions and institutional rules- and actors- those actors interact with those institutions in varied ways and not in a linear fashion (hence PEA). My take is some ways we have always done some ‘PEA’ possibly not just in the most systematic way and also without the current buzz and the tag ‘PEA’.

    I totally agree with you Gilbert!

    It is an ‘additional’ tool which does not seek to change the way the system works but rather increase the understanding of the system.

    Have only managed to quickly browse through the article but my take is that the two processes SAM and PEA should not be divorced from each other. Social accountability is important but you need to understand the context in which such accountability processes can be introduced or transformed, including the structures, processes, rules of engagement as well as normative values in society that need to be reformed and changed in order to have strong SA systems. Such understanding obviously comes from some PEA work. I therefore think that both approaches can be complementary and the only problem arises when one uses/ sees in PEA some quick fix to the world’s problem or uses PEA to simply change the power structures or existing order in order to suit private interests. I think this is where the weakness lies- when knowledge gained through PEA is used by donors in order to push hidden material agendas. For those on the ground, I think PEA is important in for providing more knowledge about opportunities and challenges in program implementation. And I do agree with you Gilbert, some of us on the ground having been doing PEA for years without calling it PEA.

    I am a social accountability monitoring advocate. SAM promotes efforts by governments to put in place resources and plans which respond to people’s needs so that they progressively move towards the realization of their socio- economic rights. The PEA on the other hand if it does not embrace the main principles of Social accountability then it might not be providing a solution but rather another problem which needs to be solved.

    The PEA does not ‘aid’ social accountability but it also does not negatively affect it. Take it this way:

    Social accountability principles could be likened to a teacher’s rules for her class of students. PEA would just be an essay that a quiet student wrote about why the class monitor chose not to write his best friend’s name among the noise makers while the teacher was away. The PEA analyses application of the rules (whatever rules they are – aligned to social accountability principles or not) and does not seek to change the rules. However by reading through a PEA the policymakers can see which rules need changing.

  2. Thembile says:

    Solicited some input form my office colleagues as we use the PEA approach for the design of our small scale mining project and I shared their reactions above. It was a very interesting debate. As the general feeling is that PEA is not a new approach, we have always been using it but not giving it a name in development.

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