Attachment J.1 – What is Political Economy Analysis and Why is it Important.pdf
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- Solicitation number
- 95332420Q0067
- Issued by
-
Millennium Challenge Corporation
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This solicitation requests quotations for a contractor to conduct freight transport market analysis and political economy analysis in Benin and Niger. The Millennium Challenge Corporation requires the selected contractor to interview stakeholders, observe the freight transport sector, analyze market structure using collected data and documents, and gauge the political situation through media reports and expert opinions. The contractor must organize related workshops and discussions. Quotes must be submitted by 1:00 pm Eastern Time on October 21, 2020 to Yembeka Kapakasa at kapakasay@mcc.gov with a copy to Jackie Naranjo at naranjoj@mcc.gov. Questions are due by October 1, 2020 to the same individuals. The technical approach, staffing qualifications, past performance, and price will be evaluated.
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J.1 What is Political Economy Analysis and Why is it Important?
There is no single conceptual framework for political economy analysis, but the following OECD-DAC definition is useful in capturing some of the main elements:
Political economy analysis is concerned with the interaction of political and economic processes in a society: the distribution of power and wealth between different groups and individuals, and the processes that create, sustain and transform these relationships over time.
This definition draws particular attention to politics, understood in terms of contestation and bargaining between interest groups with competing claims over rights and resources. However, it is equally concerned with the economic processes that generate wealth, and that influence how political choices are made. In reality these processes are closely inter-related and part of a unified set of dynamics which influence development outcomes.
Political economy analysis is particularly useful for development practitioners since it helps us to understand what drives political behavior, how this shapes particular policies and programs, who are the main “winners” and “losers”, and what the implications are for development strategies and programs.
Specifically, it is concerned with understanding:
• The interests and incentives facing different groups in society, and how these generate particular policy outcomes that may encourage or hinder development.
• The role that formal institutions (e.g. rule of law, elections) and informal institutions (social, political and cultural rules of the game) play in shaping human interaction and political and economic competition.
• The impact of values and ideas, including political ideologies, religion and cultural beliefs, on political behavior and public policy.
In this way, political economy analysis helps us to understand how incentives, institutions and ideas shape political action and development outcomes in a given country. This can be extremely useful when thinking about the feasibility of policy reform and institutional change, the contribution that MCC can realistically make, and the risks involved.
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