Stefan Hochhuth - Mind the Political Economy PRESENTATION THE VALUE ADDED OF POLITICAL ECONOMY! ASWAN, MAY 2013 SDC F2F DLGN-NETWORK STEFAN HOCHHUTH
THE POLITICAL ECONOMY OF REFORM • INTRODUCTION OF CONCEPT • KEY MESSAGE: • KEEP THE POLITICAL ECONOMY IN MIND! • APPROACH: • HOW TO MAKE REFORMS HAPPEN! 2
BACKGROUND PROBLEM: • PERFECT PROJECT/ REFORM (1ST BEST SOLUTION) BUT IMPLEMENTATION IS … • … DIFFICULT • …FAILS • …GETS POSTPONED • ETC. WHY? • DIFFICULT ENVIRONMENT • RESISTANCE • PROBLEMS 3 Stefan Hochhuth - Mind the Political Economy
WHAT IS POLITICAL ECONOMY? SOMETHING FAMILIAR: • ABOUT DAILY LIFE DECISIONS • WHY DO PEOPLE DECIDE IN A SPECIFIC WAY? LITTLE THAT IS NEW: • A SYSTEMATIC APPROACH • PEOPLE FOLLOW SPECIFIC INCENTIVES POLITICAL ECONOMY OFFERS TOOLS TO ANALYZE THE ENVIRONMENT AND MOTIVATIONS OF KEY ACTORS. 4
WHAT IS “ECONOMIC” IN POLITICAL ECONOMY? ECONOMIC PRINCIPAL OF RATIONAL BEHAVIOR: PEOPLE WANT TO MAXIMIZE THEIR UTILITY …BUT HAVE DIFFERENT INCENTIVES 5
WHAT IS “POLITICAL” IN POLITICAL ECONOMY? PEOPLE ACT FOR VARIOUS REASONS: • MORAL CONSTRAINTS (RULES, NORMS, TRADITIONS) • STRUCTURAL CONSTRAINTS (VETO PLAYER) • HIERARCHY CONSTRAINTS (BOSS, DEPENDENCIES) • PERSONAL CONSTRAINTS (RE-ELECTION, SERVING INTERESTS OF FRIENDS) • MATERIAL CONSTRAINTS (CAPACITY, TIME) 6 Stefan Hochhuth - Mind the Political Economy
WHY IS IT IMPORTANT? MIND THE POLITICAL ECONOMY! EVEN BEST IDEAS CAN FAIL IF INCENTIVES ARE WRONG! PROBLEM TO SOLVE: BUDGET (MONEY, SKILLS, PROPONENTS, TIME) > COSTS (CONVINCING OPPONENTS, TIME CONSTRAINTS, INCENTIVE CONSTRAINTS, ETC.) MAX: SUPPORT MINIMIZE: OPPOSITION 7 Stefan Hochhuth - Mind the Political Economy
WHAT IS POLITICAL ECONOMY II? POLITICAL ECONOMY IS... • … THE UNDERSTANDING OF INSTITUTIONAL STRUCTURES • … THE UNDERSTANDING OF DECISION MAKING PROCESS • … THE UNDERSTANDING OF KEY PLAYERS THAT COULD PUSH OR BLOCK A REFORM • … THE UNDERSTANDING OF INCENTIVE CONSTRAINTS AND OBSTACLES TO 8 REFORM Stefan Hochhuth - Mind the Political Economy
MAIN QUESTIONS • ARE YOU SURE THAT YOU FOLLOW THE RIGHT REFORM OBJECTIVE? • DO YOU KNOW WHO WILL MAKE THE FINAL DECISION? • DO YOU KNOW WHO THE KEY DECISION MAKERS ARE? • DO YOU KNOW WHO DEPENDS/ RELIES ON WHO? • DO YOU KNOW WHAT THE REAL AGENDA OF KEY PLAYERS IS? • DO YOU KNOW HOW TO MOVE PLAYERS TOWARDS REFORMS? 9 Stefan Hochhuth - Mind the Political Economy
ADVANTAGES • PROVIDE A SYSTEMATIC APPROACH ON SOLVING IMPLEMENTATION PROBLEMS • IDENTIFY PROBLEMS EARLY (POLITICAL RISK MANAGEMENT) • RETHINK TRADITIONAL APPROACHES • OPTIMIZE THE USE OF LIMITED RESOURCES • AVOID MISSIONS IMPOSSIBLE 10 Stefan Hochhuth - Mind the Political Economy
POLITICAL ECONOMY ASSESSMENTS 1. Reform • What is the objective? Analysis 2. Institutional • What is the institutional setting? Analysis 3. Political Risk • Who are the key actors? Analysis 4. Feasibility • Is it feasible? Analysis • How can it be implemented 5.Implementation 11 Stefan Hochhuth - Mind the Political Economy
POLITICAL ECONOMY ASSESSMENTS REFORM ANALYSIS 1. Reform Analysis • WHAT DO YOU WANT TO ACHIEVE? 2. Institutional • WHAT ARE THE DIFFERENT ACHIEVEMENT OPTIONS (LINEAR Analysis CONTINUUM)? Budget Transparency in Mongolia 3. Political Risk Analysis Final Executive Info published disaggregated In-year budget on last year ’ s Final budget proposal budget school & disaggregated published execution published Complete hospital 4. Feasibility budget upon NA upon NA report opacity budgets published approval approval published Analysis 35 0 50 80 95 20 100 5 30 40 60 90 Full budget Aggregate National MTBF Info Audit disclosure; 5. budget budget published published reports citizens get published published upon on actual published Implementatio access to after NA after passage submission funds sent for last same info approval n in NA to NA to schools year ’ s as NA & hospitals budget 12 Source: The World Bank Stefan Hochhuth - Mind the Political Economy
POLITICAL ECONOMY ASSESSMENTS 1. Reform INSTITUTIONAL ANALYSIS Analysis 2. Institutional • WHICH INSTITUTIONS ARE RESPONSIBLE FOR POSSIBLE CHANGE? Analysis • WHICH INSTITUTIONS FINALLY DECIDE OR COULD PROMOTE THE CHANGE? 3. Political Risk • WHAT ARE THE DECISION MAKING PROCESSES? Analysis 4. Feasibility TOOLS: Analysis • WORLD BANK INSTITUTIONAL ASSESSMENT TOOLS 5. • DFID - DRIVERS OF CHANGE (DOC) Implementatio n 13 Stefan Hochhuth - Mind the Political Economy
POLITICAL ECONOMY ASSESSMENTS POLITICAL RISK ANALYSIS 1. Reform Analysis THE POLITICAL RISK ANALYSIS ASSESSES POLITICAL MARKET IMPERFECTIONS. 2. Institutional Analysis • IDENTIFY ALL POLITICAL RISKS 3. Political Risk Analysis 4. Feasibility Analysis SOURCE: PEMU (SDC) 5. Implementation • EXAMINE THE KEY PLAYERS INCENTIVE STRUCTURE AND PERCEPTIONS 14 Stefan Hochhuth - Mind the Political Economy
POLITICAL ECONOMY ASSESSMENTS 1. Reform POLITICAL RISK ANALYSIS Analysis 2. Institutional KEY PLAYER ANALYSIS Analysis WHO ARE THE PLAYERS? 3. Political Risk Analysis STAKEHOLDER ANALYSIS WHAT ARE THEIR CHARACTERISTICS, INTERESTS, 4. Feasibility RELATIONS, SALIENCE? Analysis POWER ANALYSIS 5. Implementation WHAT IS THEIR DEGREE OF THEIR INFLUENCE? 15 Stefan Hochhuth - Mind the Political Economy
POLITICAL ECONOMY ASSESSMENTS KEY PLAYER ANALYSIS 1. Reform Analysis • WHO ARE THE KEY PLAYERS IN YOUR REFORM CONTEXT? Political System Interest Groups Policy elites Farmers 2. Institutional National government/ Cabinet Members Industrialists Analysis Politicians/ Parliamentarians Consumers, etc. Bureaucrats/ civil servants Local private sector Regulators Representatives of target or affected groups (Lobbyists) The President/ Head of State Trade Unions 3. Political Risk Community leaders Local community groups/ Community based organizations Legislators General public (workers, farmers Analysis Political Parties/ Regional and local Government Churches Minority groups Opinion makers Externals Local media International Media 4. Feasibility Religious leaders International NGO Analysis Local NGO International Donors Celebrities International Private Sector Journalists International Organizations (Neighbor) States 5. Others Implementatio Military / Secret Services n Business leaders Organized Crime 16 Aristocrats Middle Class Stefan Hochhuth - Mind the Political Economy
Power Matrix – R. Calland (2006) Anatomy of South Africa: Who Holds the Power? Importance Influence Stefan Hochhuth - Mind the Political Economy
Political Economy Assessments Stakeholder Analysis 1. Who are the stakeholders relevant to the issue? 2. What positions do they adopt? GOOD ENOUGH SOME REFORM NO REFORM FULL REFORM REFORM 18 Stefan Hochhuth - Mind the Political Economy
Power Analysis 3. What is their potential to influence the outcome? 4. How relevant is the issue to them? 19 NO REFORM SOME REFORM GOOD ENOUGH FULL REFORM REFORM Stefan Hochhuth - Mind the Political Economy
POLITICAL ECONOMY ASSESSMENTS UNDERSTANDING OF INCENTIVE STRUCTURE 1. Reform Analysis OF THE KEY DECISION MAKERS 2. Institutional • IDENTIFICATION OF THE BIGGEST OBSTACLES TO REFORMS Analysis • CALCULATION OF THE TOTAL COSTS OF REFORMS. 3. Political Risk Analysis • REFORM/ PROJECT IS FEASIBLE IF 4. Feasibility Analysis BUDGET (MONEY, SKILLS, PROPONENTS, TIME) > 5.Implemen- COSTS (CONVINCING OPPONENTS, TIME CONSTRAINTS, INCENTIVE tation CONSTRAINTS, ETC.) 20 Stefan Hochhuth - Mind the Political Economy
POLITICAL ECONOMY ASSESSMENTS HOW TO FLIP THE SEESAW? 1. Reform Analysis 2. Institutional Analysis 3. Political Risk Analysis 4. Feasibility Analysis 5.Implemen- tation 21 Stefan Hochhuth - Mind the Political Economy
Stakeholder Dynamics Who is expected to change position? In response to whom? What is the predicted outcome and degree of consensus? What are the potential obstacles to achieving the desired level of reform? 22 NO REFORM GOOD ENOUGH FULL REFORM SOME REFORM REFORM Stefan Hochhuth - Mind the Political Economy
POLITICAL ECONOMY ASSESSMENTS IMPLEMENTATION 1. Reform Analysis CHANGE IN INSTITUTIONAL STRUCTURE (MERGER) CHANGE POWER IN KEY PLAYER STRUCTURE (NEW 2. Institutional ASSIGNMENT) Analysis CONVINCE OPPONENTS OF REFORMS (SON OF PRESIDENT) 3. Political Risk COMPENSATION: TRANSFERS TO LOSERS OF REFORMS Analysis (TRAINING) PARTIAL IMPLEMENTATION OF REFORM (30%) 4. Feasibility Analysis COALITION BUILDING (DOCTORS & MINISTER OF EDUCATION) 5. Implemen- tation SANCTIONS (STOP BUDGET SUPPORT) 23 Stefan Hochhuth - Mind the Political Economy
Recommend
More recommend
