Is political economy analysis too challenging for aid donors?
In short, compared to ten years ago, a much better informed, politically aware conversation is taking place among development practitioners. The striking thing, however, is how limited the impact has been on what the main aid agencies actually do. Donors have found it hard to move from better analysis to better practice.
A common pattern is for staff of donor agencies – especially those based in developing countries – initially to embrace political economy analysis as a welcome opportunity to legitimise and structure the tacit knowledge they already have about the impact of politics on local development processes. This is often followed by disillusion as the gulf between what the analysis is telling them and the political economy demands of the aid business become apparent. The analysis reveals the depth of the challenges involved in building effective states and public institutions, and the limited influence of outsiders seeking to promote progressive policy change in clientelist systems where there are few incentives for politicians to deliver public goods. This reality undermines the optimistic – and simplistic – narrative that sustains the aid business, including assumptions of a shared agenda with development “partners”, and the scope for aid and policy dialogue to contribute directly to transformational change.
Donors have also encountered problems at a practical level: it can be hard, especially in conflict affected contexts, to assemble evidence about very informal relationships and practices; and many of the findings are politically sensitive, raising awkward questions about whether or not to make them public. The quality of studies varies considerably, reflecting inadequate investment of time and resources; and analysis is too often seen as a one-off exercise. The nub of the problem is that donor agencies tend to see political economy analysis as a toolkit to improve aid programming rather than a starting point for investigating more honestly how development processes are unfolding over time in a given regional, country or sector context. A preoccupation with aid and the role of donors gets in the way of recognising that most progressive change is cumulative, unpredictable, highly political and needs to be locally led.
Where donors have made good use of insights from political analysis this is often because they have adopted quite unconventional ways of working. They have stood back and allowed local actors to take the lead, provided flexible funding to support iterative problem solving, invested intensively in building relationships that rely on shared interests not the prospect of large amounts of aid money, and made long term commitments. These cases show that donors can work in ways that are politically smart and locally led if there is a supportive environment within their own agencies. But they are the exception rather than the rule, and recent trends in donor practice including an emphasis on demonstrating short term results, meeting ambitious spending targets and reducing administrative costs all work against them.
There is mounting evidence from research and practice that aid which is not politically informed is likely to be ineffective, and may well be harmful – especially in countries struggling to contain violent conflict. However the problem for donors is that political economy analysis lays bare the flaws in technocratic, aid centric approaches to development that have long characterised mainstream practice. The tension this creates helps explain the ebb and flow of interest in political analysis within donor agencies. The good news is that when donors do take time to understand the complex political reality underlying current development challenges, they can contribute to finding solutions that are both technically sound (if not optimal), and politically feasible.
 For example, Centre for the Future State (2010)
 Carothers and de Gramont (2013)
 Booth and Unsworth (2014)