Post 2015: Global Action for an Inclusive and Sustainable Future

drive or obstruct poverty-reduction or development
policy choices and implementation measures.
political economy refers to a broad set of intellectual
traditions. typically, there are three tiers of analytical
tools developed for country and sector levels:
• Structures: the first level deals with structural,
‘hard to change’ or intransigent features such
as natural resource endowments, the broad
structure of the economy, regional relations,
the main sources of (potential) government
revenues, etc. the structure of the economy
and the resource endowment, for example, may
influence the nature of government revenues.
Such revenues may be earned (through taxation)
or unearned (such as derived from mineral rents,
oDa, etc.). the nature of these revenues often
shapes the political incentives facing particular
groups – most often ruling elites 16 (see also box
2.6). other important features may include
the history of state formation, the exclusion
of regions and population groups, which may
cause social, ethnic and economic cleavages,
threats to state legitimacy, internal conflict and
fragility. Such features were clearly at the heart
of the deep-rooted conflicts in all four casestudy
countries.
• Institutions: at a second level, political economy
analysis is interested in how institutions function
and shape the behaviour of political and economic
actors. In all countries, formal institutions
(anchored in the constitution, codified in laws,
etc.) interact with informal rules of the game
(based on social, cultural, ethnic, religious
norms and beliefs) and these interactions shape
the distribution of power, the nature of political
competition, the functioning of markets, etc. It
is often difficult for outsiders, such as donors, to
understand or even ‘see’ informal institutions,
because the conceptual toolkit has been largely
designed to focus on the tip of the iceberg, i.e.
formal institutions. the consequence is that
external development agents undermine ‘their
ability to identify change opportunities and
constraints and explains why reforms face
recurring limits’ (andrews, 2013: 42).
• Actors: the structural and institutional levels
shape political processes and influence the
behaviour and choices of key actors. In a stylised
way, one can distinguish three groups of actors
(see Figure 2.1): the ruling political elite, state
bureaucrats and sector actors (civil society, and
firms, farms and households). In an ideal state
of affairs, these groups would effectively work
together in mutual, cooperative and synergistic
ways and generate positive development
outcomes (a Joint Statement, 2012). this is not
what tends to happen in developing countries.
the pattern of relations is often one in which
ruling elites or governments do not make credible
commitments to sector actors relating to the
safety of and the gains from their investments.
usually, such ruling elites do not prioritise the
provision of public or collective goods that may
stimulate private investment, or they do not give
priority to constructive engagement between the
state bureaucracy and sector actors.
one might ask why donors and recipient countries
have managed to engage in the logic of development
narratives for so long, with so little evidence that aid
does much to contribute to the latters’ administrative
capability. one answer is the so-called ‘isomorphic
mimicry’, whereby bureaucrats and elites in aidrecipient
countries adopt the appropriate institutional
appearances and structures (or forms) in order to hide
or camouflage the fact that they have not adopted the
institutional functions. this results in empty policy
gestures and (often costly and time-consuming)
reforms that are never implemented. reforms are
adopted as mere ‘signals’. by overlooking important
features of the context, external backers risk betting
16 the term ‘elite’ in this report refers to individuals who command high levels of political, military, financial and/or economic power.
poSt-2015: Global actIon For an IncluSIvE anD SuStaInablE FuturE
There has been
a considerable
effort to better
understand
what drives
the differences
in development
policy choices
and trajectories
in developing
countries.
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