Political Economy in Practice : Lessons from the Field

Abstract

This note synthesizes the experience of three political economy case studies: the water sector in West Bank and Gaza, the bus sector in Dhaka, Bangladesh, and the port sector in Chittagong, Bangladesh. The objective is to describe: the process of conducting these types of studies, and how recommendations which have a higher chance of feeding into reforms or operations can be developed. It is hoped that these insights will be useful for development practitioners and operational teams who are considering conducting political economy studies. It is increasingly accepted that better understanding and management of the political economy of policy reforms can help development agencies, including the World Bank, refine policy advice and operational support in partner countries. Support of reforms which are technically feasible and politically acceptable, while simultaneously promoting a poverty reduction agenda, remain a core challenge for the World Bank. It is anticipated that the additional time and effort put into political economy work will often translate into improved design and implementation of sector reforms and operations, and thus increase their effectiveness. It illustrates lessons for operational teams and development practitioners on conducting political economy work. Finally, it shows that certain obstacles need to be anticipated when translating political economy recommendations into design of operations and illustrates, through the case studies, how they can be addressed.