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Can a Political Economy Approach explain aid donors’ reluctance to think and work politically? Guest post from Neil McCulloch

March 27, 2014
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The more enlightened (in my view) aid types have been wagging their fingers for decades, telling their colleagues to adopt more politically literate approaches to their work. Why isn’t everyone convinced? Neil McCulloch applies a bit of political economy analysis to the aid business.

Over the last fifteen years or more, a new approach to development assistance has been gaining ground in policy circles.  Broadly entitled the “political Neil-McCullocheconomy” approach, it attempts to apply a more political approach to understanding development problems and, importantly, development “solutions”.  In particular, a central tenet of the approach is that many development problems are fundamentally political rather than technical and that therefore solutions to these problems are most likely to come from inside a country’s polity than from outside.  Perhaps the most famous recent example of this line of thinking is Acemoglu and Robinson’s 2012 book Why Nations Fail.

Acemoglu and Robinson conclude that if each nation’s fate depends primarily on its domestic political struggles, the role for external development assistance is minimal.  However, the response of practitioners to this field is to turn this argument on its head i.e. that is, if indeed each nation’s fate depends primarily on its domestic political struggles, development assistance should be trying to influence these struggles in ways that make pro-development outcomes more likely.  Yet despite more than a decade analysis, the political economy “approach” is still rarely used by donors in the field.  Why?  I think there are four reasons:

It’s too “political”.  Perhaps the main reason why political economy approaches are not widely used is the (correct) perception that they are, in some sense, meddling in the politics of the country.  Donors presence in a country is at the permission of the host government who, almost by definition, constitute the winning elite of the most recent political struggle within the country.  Most governments are generally not sympathetic to the idea of foreign governments funding “political” activities in their countries and, knowing this, most donors emphasise the benign, technical and apolitical nature of their work.  This is why the dominant form of political economy work is Political Economy Analysis.  Donors like this because it provides them with some insight into the political dynamics of the countries in which they work so that they can assess the risks of their programs failing because they go against the interests of local political actors. Indeed, if it is appears at all, political economy considerations generally only appear in the Risk Assessment section of project concepts and designs.

cropped-PoliticalEconomyEditedIt spends too little money.  Although donors pursue particular development goals within the countries in which they work, they do so by spending public money.  In practice, this means that each country is allocated a certain budget and most of the practical activity of donor staff is associated with the mechanics of spending this money in an accountable fashion.  Moreover, more “important” countries are allocated larger budgets, in part because the politicians of donor countries use the size of the budget to signal to the government of the country the importance with which their country regards the bilateral relationship.  Yet the “political economy approach” to assistance generally entails building networks and facilitating discussions across a range of local actors who then, themselves, push forward reform agendas.  This requires a lot of time and effort – but it spends much less money than building schools and hospitals.  Indeed it would be almost impossible for donors to spend the sums of money at their disposal simply with a political economy approach and yet scaling back the budget to cover only the amounts necessary would result in a budget for assistance which might be seen as derisory by the host government.

It lacks an operational evidence base.  A huge amount has been written about the political economy of development.  However, the vast majority of it has been descriptive or analytical – very little of it has been operational (an exception is ODI’s work on the political economy of service delivery).  Therefore, although there are some promising examples of success (e.g. the Asia Foundation’s approach in the Philippines), there is currently little solid evidence that taking a “political economy approach” actually yields better and more sustainable outcomes than a more traditional approach.  The Developmental Leadership Program is currently coordinating a set of case studies which aim to explore precisely this issue; but until we have clear evidence, it is not surprising that many donor staff are cautious about adopting what is seen by some as a risky and unproven approach.

There is no sanction for quiet failure.  Donor projects sometimes fail.  Most donors put in place a complex architecture of processes to try to minimise the transparency 2probability of failure (e.g. rigorous, and lengthy, design processes, regular monitoring and independent evaluations).  Yet despite this, it is extremely hard for most donors to determine the extent of success or failure of the portfolio of programs that they fund in a country.  In part, this is because measuring success is difficult since the situation if the assistance had not been provided is often unknown.  It is also because donor projects are often long (five years or more), whilst the tenure of donor staff in a country is generally short (three years or less), so few staff see projects through the entire cycle.  And it is also because it is not possible (and probably not desirable) to have sanctions for failure.  Unless projects “blow up”, it is perfectly possible for them to continue for years, delivering “results” by substituting for local capacity without achieving any sustainable change.  Without a general sense that projects are failing to deliver sustainable change, there is little pressure for a new approach.

It is easy to see that an approach that seeks to tackle an unrecognised failure using a new, labour intensive method with little track record that spends small amounts of money and may get the donor into political hot water is unlikely to be embraced too enthusiastically by the senior management of most donors.  Which is a shame – because it should.  Contrary to popular belief, Aid has achieved a lot of good in the last 50 years (see Roger Riddell’s nuanced account); but where it has done so, it has often been because it has engaged “politically”, changing the incentives for local actors to deliver sustainable changes in the opportunities for and services to the poor.  An approach that subordinates money to a thorough understanding of context and a desire for sustainable results will achieve more in the long-run than the current focus on “delivering” (i.e. buying) results. Sadly, the political economy of donor incentives means that it will probably remain a marginal pursuit.



  1. Nice blog, Neil. I would add that donors themselves are not immune from political influence. They are political organisations by nature and deal politically with the decisions about their interventions.

  2. Well-written as usual Neil. A more politically informed approach may be “marginal” at this point or an “almost revolution” as Tom Carothers and Diane de Gramont put it. But we can appreciate that some innovations are adopted faster than others. There may be some lessons for us from Atul Gawande’s nice article “How do good ideas spread?” in the July 29, 2013 New Yorker.

  3. Nice post Neil, and glad you find our work on the politics of services and sectoral reform useful. We are doing more work specifically focusing on donors and other agencies’own ways of working, also with Asia Foundation, so more to come soon.

    What you say about the lack of evidence of PEA making a difference compared with other, more traditional approaches is critical and identifying clear outcomes and counterfactuals is something we are working very hard on at the moment. Difficult, but not impossible…..

  4. Neil, good and clear points about challenges to thinking and working politically. Also worth noting that even in agencies that have advanced in ‘thinking politically’, there have been real challenges in translating that into working politically, for the reasons you outline. There is a danger that agencies develop and use tools such as PEA but fail to adopt a politically-informed approach more broadly.

  5. Neil,
    I think about political economy in terms of the mundane political lives (small ‘p’) of people within governmental units, schools, communities etc. rather than the high level politics. The analytical lenses used in political economy studies over the past few decades (not much help programmatically I must say) focus disproportionately on a state/society narrative (corruption, patrimonialism etc.) rather than attempt to understand what it takes to achieve accountability locally. For ordinary people, particularly in rural settings, high level politics is really an abstract conversation. Yes politicians come around every general election and then disappear for five years. In line with Marta Foresti’s post on ‘Making Services Work for Poor People’, a priority for me is making that local school work well. The key to school success is often in helping to resolve power relations and supporting polities to build socio-political arrangements (including incentive systems) that produce desired learning outcomes. I think that this is within what donors can influence.

    1. Look at the work done under the banner of Africa Power and Politics Programme, for analysis of local-level, small-p ‘politics’ and service delivery.

  6. Thank you for this post Neil. My own small involvement in development work has been in efforts to help countries design and implement freedom of information laws. The point of such laws is to fundamental shift power from government to governed, to assist accountability and participation. But because it’s politically safer for donors to promote freedom of information as a human rights issue, rather than explaining and persuading for these laws on an instrumental basis, the operation of the law is likely to encounter more resistance from government, and falters, failing to deliver the accountability or participation the donors were hoping for. ‘Interfering’ in the control of the flow of information between government and the public is one of the most political interventions in the domestic politics of a country, so it’s difficult to see how to make progress with this. Cambodia provides the most glaring example of the problems faced by donors trying to get an FOI law on the statute books; donors even ‘went on strike’ in an effort to persuade the government to adopt the law, but the government called their bluff.

  7. Thanks for a nicely expressed and cogent blog.

    The argument about quiet failure resonates with one of the themes of Clay & Schaffer 1984: escape hatches. When development programmes fail, familiar excuses often appear — ‘lack of political will’, ‘shortages’/’lack admin capacity’, one missing ingredient (that was overlooked: OK so long as it’s political or social), ‘policy not rational’, etc. These are all examples of explanations that are rarely seen as culpable failures on the part of the funders and implmenters.

    Clay & Schaffer’s book — 30 years old — is a plea for precisely the sort of analysis that Neil calls for, but wisely recognises will be ignored.

    Ref: Clay, E. J. & B.B. Schaffer (Eds), 1984, Room for manoeuvre. An exploration of public policy planning in agricultural and rural development, London: Heinemann Educational Books

  8. Nice blog, agreed. I wonder how comparing “aid” ODA to other spending in foreign countries would further our understanding of how external actors (foreign govts) engage with political processes and are quite unafraid to do so. E.g. in my region, Latin America, it is not hard to make a long list of large-scale political incentivisation, although not usually with development objectives in mind… So governments do do all of this, it is just aid agencies that don’t… Having said that, one reading of the role of WB and IMF policy lending is precisely the use of aid to “influence these struggles in ways that make pro-development outcomes more likely” – may not have used those words, may not have been pro developmental, but certainly the view was to use cash injections to achieve largescale economic/political reform… JG

  9. Neil, Cornelius,

    true, these challenges are great, but not insurmountable, given a few of the right ingredients. we’ve been battling with these problems for nearly 20 years here in Nigeria, trying to support local actors to engage and take control of the politics surrounding their local issues. this, out of necessity, has increasingly driven us to support them to find innovative ways to engage the political economy of the state, because of the overbearing influence it has on the political economy of their local issues. as the old adage goes, you can stand in a bucket and lift it – you need to negotiate the lift with those holding the handle.

    to be fair to DFID, albeit at the margins, we’ve benefited from the support of a string of well-grounded, fore-sighted (bordering on ‘maverick’) DFID advisers, who’ve given us the space we’ve needed (i.e. provided a buffer between the programmes and the usual donor requirements) to experiment through implementation and carry the learning (from failure and success) from one programme to the next, over 3 generations of DFID programming in Nigeria – a tiny flash of amber on the ICAI report. it’s not been easy, and we’re still learning, but we’re gradually getting somewhere …

  10. Just to add to Steve’s comment above, and to this very interesting blog, our approach to political economy analysis in SAVI has not been to contract political scientists to produce PEA reports to inform risk management and programme design etc. but to support our staff and partners to engage in political economy analysis themselves. This is about making politically smart thinking central to the strategic and day to day decision making of staff and partners, for them to continually update this knowledge as the political economy of their context shifts and changes, and reflect this in their actions. In our programme, this approach is working and getting results.

  11. Steve, Helen,

    The work that you are doing is the shift that needs to happen in development. Learning from programs must be real-time and everyday to make the needed adjustments. We are more effective as catalysts/facilitators than we are as doers. This is why I marvel at good coaches (José Mourinho type) because they are exemplary facilitators but never doers. They learn from the whole match and make changes as necessary. They do not go away at kick-off and show up 90 minutes later to ask what happened.

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