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Political Economy & Policy Dialogue

The objective of Political Economy is to understand how power and resources are distributed, organized and contested in different contexts, and how this relates to development processes. It is an approach to understand the political factors and political dynamics in the context in which change should take place, and to identify entry points for change. It further analyses the possible implications of change/reforms for different population groups, i.e. who benefits and who loses, what potential tensions, conflicts this implies and what this means in terms of risk identification and its management. Finally it is a lens through which to look at development problems.

A range of analytical tools and methods offer support in understanding: [A] institutional structures; [B] decision making processes; [C] key players that could push or bloc a reform, their power position and motivations; [D] the understanding of incentives, constraints and obstacles to reform.

Political economy analysis combines the economic principle of rational behaviour that influences decision making with the political perspective of power positions and power relations, both formal and informal power. Tools help to identify ways to maximize support, or minimize resistance, find the right incentives and targeted interventions for most cost effective results and more transformative (political) change processes.

You will find in this site selected information that will help you get an understanding of the topic; tools that can support you in your day-to-day work; and a selection of reports that will give you a flavour of the richness and usefulness of political economy analysis. You also find documentation of PE webinars.

Most of the DDLG programs also support social reform agendas at the national or subnational level. A well-managed Policy Dialogue process, jointly conceived by the management at the Swiss representation, creates fertile soil for DDLG interventions and/or reforms and thus ultimately increases SDCs leverage. Projects and programmes often cannot tap their full potential and are less sustainable due to non-enabling policy environments. Interventions that result in favorable institutional and policy change or capacity building have a more profound and lasting impact – and are therefore central to aid effectiveness. In the Category Policy Dialogue below you find the H2N ‘Results oriented Policy Dialogue’ by SDC, but also practical examples of how offices have operationalized their approach to Policy Dialogue as well as further literature.