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Working paper 33
Pablo Yanguas and David Hulme
Although politics has become central to international development assistance, the use of political economy analysis (PEA) as a means for greater aid effectiveness remains an aspiring epistemic agenda. Even though virtually all aid donors have some personnel working on the development and implementation of PEA methodologies and frameworks, whether this new cognitive model for aid is compatible with pre-existing administrative factors is still an open question. We argue that for PEA to become fully institutionalised in donor agencies it needs to overcome the hurdles of administrative viability: its proponents need to reconcile it with corporate and professional incentives, as well as with the political environment in which an agency operates. We track this process empirically within two PEA leaders: the UK Department for International Development (DFID) and the World Bank. Using documents and interviews from headquarters as well as three country offices – Bangladesh, Ghana, Uganda – we find that political economy analysis has not yet become institutionalised in programming, management or the professions, and remains an intellectual agenda very much rooted in the governance silo. We conclude by arguing that the future of PEA lies in organisational change, not any particular framework, and that this change is more likely to occur by disseminating PEA outside of the governance profession into agency management and the various sectors of development assistance.
Working paper 32
David Hulme, Antonio Savoia and Kunal Sen
The increasing realisation that governance quality is a fundamental element of long-run development has led to its consideration as a desirable development goal in its own right. To contribute to such a process, this paper provides a framework to set, measure and monitor governance goals in the Post-2015 Development Agenda. First, we assess whether existing cross-national measures on governance quality can be exploited to routinely capture aspects of legal, bureaucratic and administrative quality. Such a “quick fix” approach to measuring governance quality is fraught with challenges. The current practice of measurement is still subject to the short country coverage of most available measures, issues of comparability and legitimacy, as well as methodological shortcomings. Then, we argue that, in the long run, measuring and monitoring governance quality may require reconceptualising “good governance” and designing internationally shared measures that are routinely provided by national statistical offices. Finally, we consider the different approaches to setting governance goals, arguing in favour of a combination of national target setting and minimum standard with continuous improvement.
In the developing world today an ever growing number of countries have sustained economic growth and democracy for some time, and yet find that economic and political inclusion remains elusive for many poor and disenfranchised citizens. This is where ESID research comes in.
ESID is interested in the dynamics that bring about transition from limited access to open access political orders, the political and social outcomes of economic development, and the policies that promote and ensure social justice, even in seemingly unpromising contexts. Our ultimate aspiration is to change how development practitioners and scholars think about inclusion, capacity and commitment.
ESID seeks to answer such questions as:
It is the ‘how’ – and not so much the ‘what’– of development that interests us.
To read more about our approach, download Effective States and Inclusive Development: An Introduction (pdf).
ESID is pleased to announce the publication of ‘The Dynamics of Economic Growth: A Visual Handbook of Growth Rates, Regimes, Transitions and Volatility’ (PDF, 18.80MB) by Sabyasachi Kar, Lant Pritchett, Selim Raihan and Kunal Sen.
The Handbook presents graphs to illustrate the dynamics of the growth experiences of 125 countries. These graphs highlight the dynamic and episodic nature of economic growth and show that many countries have experienced very different growth phases. The timing and magnitude of ‘breaks’ or ‘episodes’ or ‘regime transitions’ for all 125 countries are identified using a standard statistical procedure.
This view of economic growth as transitions across growth phases suggests the need to move beyond current approaches to studying growth. To understand what determines economic growth, a ‘third generation’ of theoretical models and empirical methods needs to be developed.
Uganda is a public sector reform leader in Africa. Over the last three decades the country has introduced many laws, processes and structures that are ‘best in class’ in Africa (and beyond). However, many of the reforms have produced new institutional forms that function poorly and yield limited impacts.
Research by ESID with its partners at Harvard University and in Uganda suggests the next step is to re-frame the reform agenda to address challenges concerning policy implementation, and to close the gaps between what Uganda’s system looks like and how it functions.
Income per capita in Uganda has doubled in the last 20 years. However, economic growth has been concentrated in non-tradable activities and faces challenges, including rapid rural population growth, high dependency ratios and an approaching oil boom of uncertain size and duration.
Uganda needs a sustainable diversification strategy, and government policies that will support the development of new tradable industries. The question is, ‘how should Uganda grow in order to achieve this transformation?’
ESID research uses a new understanding of how structural transformation unfolds: the theory of deepening economic complexity. It evaluates Uganda’s opportunities based on the country’s current level of economic complexity, identifies appropriate strategies, and offers policy recommendations that take into account challenges and constraints identified in Uganda.
As the international community debates the post-2015 development goals, there is an increasing realisation that governance is fundamental. Recent research shows that the capacity of the state to deliver on a wide range of development outcomes is vital for governance to achieve sustainable development. This suggests that state capacity should be part of the post-2015 agenda, either as a goal itself or as a component of other goals.
The stark variation in MDG attainment calls for a better understanding of which forms of state capacity are needed by governments. Improved knowledge starts with measurement. Dimensions of state capacity which can be measured are: administrative competence, territorial inclusion, and the proactivity of the state’s relations with society.
Data for these dimensions are already being collected by international and national organisations, universities and think tanks, making state capacity indicators a cost-effective addition to the post-2015 agenda.
Working paper 30
Policy paper 2
Ricardo Hausmann, Brad Cunningham, John Matovu, Rosie Osire and Kelly Wyett
Income per capita in Uganda has doubled in the last 20 years. This remarkable performance has been buoyed by significant aid flows and large external imbalances. Economic growth has been concentrated in non-tradable activities leading to growing external imbalances and a growing gap between rural and urban incomes. Future growth will depend on achieving sufficient export dynamism. In addition, growth faces a number of other challenges: low urbanisation rate, rapid rural population growth and high dependency ratios. However, both the dependency ratio and fertility rates have begun to decline recently. Rural areas are also severely overcrowded with low-productivity subsistence agriculture as a pervasive form of production. Commercial agriculture has great possibilities to increase output, but as the sector improves its access to capital, inputs and technology it will shed jobs rather than create them.
These challenges combined tell us that future growth in Uganda will require a rapid rate of export growth and economic diversification. The country faces the prospect of an oil boom of uncertain size and timing. It could represent an important stepping stone to achieve external sustainability, expanded income and infrastructure and a greater internal market. However, as with all oil booms, the challenges include avoiding the Dutch disease, managing the inevitable volatility in oil incomes and avoiding inefficient specialisation in oil. Policies that set targets for the non-oil deficit could help manage some of these effects, but a conscious strategy to diversify would still be needed.
The best strategy is therefore to use the additional oil revenue and accompanying investments to promote a diversification strategy that is sustainable. To determine how to encourage such a transformation, we draw on a new line of research that demonstrates how development seldom implies producing more of the same. Instead, as countries grow, they tend to move into new industries, while they also increase productivity in existing sectors. In this report, we analyse what those new industries might be for Uganda.
To do so, we first look to those products which balance the desire to increase the diversification and complexity of production, while not over-stretching existing capabilities. These include mostly agricultural inputs, such as agrochemicals and food processing. In addition, Uganda should concurrently develop more complex industries, such as construction materials, that are reasonably within reach of current capabilities and will be in great demand in the context of an oil boom. Here, the fact that Uganda is landlocked and faces high import costs will provide natural protection to the expanding demand in Uganda and neighbouring countries. We conclude with a discussion of the government policies that will support Uganda in developing new tradable industries.
Working paper 29
This paper offers a political explanation to the problem of spatial inequality in developing countries, paying particular attention to the implications of patronage politics and inter-elite power relations for the spatial distribution of public goods. After showing that existing explanations of spatial inequality are at best partial, the paper argues that prospects for overcoming spatial inequalities in the clientelist-driven political environments of developing countries depend substantially on the ways in which elites from lagging regions are incorporated into ruling coalitions, and how such forms of incorporation shape their influence over resource allocation decisions and policy agenda more broadly. The paper also departs from much of the existing literature on spatial inequality by emphasising the need to understand ‘powerlessness’ on the part of lagging regions as stemming not necessarily from their political exclusion from political decision making structures, but also from their incorporation into such structures on terms that potentially underpin their poverty. Based on this argument, the paper proposes a new framework for exploring the deeper and more structural underpinnings of spatial inequality in developing countries.