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Per Tidemand/DANIDA (2010), Political Economy and Governance Analyses of Decentralisation

This issue paper by Denmark’s Development Cooperation provides an overview of general and sectoral political economy and governance (PEG) approaches to development as well as guidance applicable to decentralisation reforms. The paper is particularly valuable for practitioners striving to improve the quality of support to decentralisation reforms.

Reforms are political as much as technical processes. PEG analyses shed light on the factors encouraging or preventing reforms in a specific context.They can also contribute to improving the design of development interventions and to bridge the implementation gap. Initially criticised for their lack of operational relevance, PEG analyses have gradually been able to inform the prioritisation and sequencing of reforms, as well as development programming such as the definition of country program priorities, the choice of purposes and aid modalities.

The following lessons can be drawn from political economy and governance analysis of decentralisation reforms developed by the World Bank or in academia, or carried out by development agencies as a basis for development programming:

1)PEG analysis should be anchored within a comprehensive technical analysis of reforms.This analysis should consider the five following preconditions for successful decentralisation: a legal framework assigning clear responsibilities, adequate financial resources, appropriate human resources, effective mechanisms for local level accountability, and oversight and coordination arrangements at the central government level.

2)PEG can help to understand the motives that drive politicians, bureaucrats and development agencies to support or oppose decentralisation reforms.

3)PEG can be useful to analyse reform options and stakeholder positions, and draw operational recommendations during the programming phase.

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Jorge Rodriguez Bilbao
19 July 2011

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