Political Economy Analysis

The term “political economy analysis” is not new, but it has gained new currency among development agencies. According to the OECD-DAC, “political economy analysis is concerned with the interaction of political and economic processes in a society; including the distribution of power and wealth between groups and individuals, and the processes that create, sustain and transform these relationships over time”.

This definition recognizes that power is essentially about relationships - between the state, social groups and individuals, or between the state, market forces and civil society. Unless we as development practitioners understand those relationships and the processes that change them, we will not be as effective in supporting the building of responsive, legitimate and resilient states.

Against this background, the Oslo Governance Centre has developed an approach for political economy analyses specific to the UNDP mandate, in order to support programming and policy processes including the facilitation of multi-stakeholder dialogues based on a rigorous analysis of country contexts and ongoing events. The approach is called Institutional and Context Analysis (ICA) and can be used in any sector and in various stages of the project/programme cycle. In November 2012, the Associate Administrator launched the Guidance Note on Institutional and Context Analysis, underlining that we need to understand the political context when we carry out development programming. You can access the Guidance Note here.