Using the Political Economy Analysis to Improve EU Development Effectiveness_DRAFT

This background paper has been prepared as part of a broader DEVCO exercise to bring together existing guidance on development practice into one harmonised document, the Project and Programme Cycle Management (PPCM) Guidance. The concept paper explains what is meant by political economy analysis, why it matters fundamentally for understanding development challenges and outcomes, and the implications for donors. It also offers practical guidance on how to undertake political economy analysis at country and sector level, and suggests how to draw on the analysis to inform every aspect of EU development activity, including programming, identification and formulation of specific interventions, risk management and policy dialogue.

 The background paper is complemented with two annexes that present political economy analysis tools to be used at country and sector level. These will be posted shortly on capacity4dev.

Overview of the background paper:

Section 1 explains the key concepts underpinning political economy analysis. This theoretical perspective shows how political economy can help understand local processes. .

Section 2 explains why political economy analysis is needed and how to draw on analysis in making operational choices at country and sector level how it can help inform risk assessment and policy dialogue.

Section 3 explains the range of political economy analysis tools available, and introduces two approaches that can be used to undertake analysis at country and sector level. Detailed guidance is given in the annexes.

Section 4 covers practical aspects of undertaking political economy analysis including timing, resource requirements, sources and research methods and advice on managing the process.