Politics and poverty: a background paper for the World Development Report 2000/1

Policy issues include:

• Democracy has differential outcomes for the poor
• States create and shape the political opportunities for the poor
• There is no reason to expect that decentralisation will be pro-poor
• There is a wide range of possibilities for pro-poor political alliances
• Many of the policies needed to improve governance will benefit the poor

Concludes that better governance and poverty reduction to a large degree go together. Measures to tackle one objective will tend also to contribute to the other. However, a note of warning is needed: that conclusion depends in part on how one conceives and defines 'good governance'. Different groups do have different needs in relation to government. The type of governance that meets the urgent needs of the poor may not much overlap with the needs of other groups. There is a strong statistical correlation between poverty reduction performance and the scores that countries were allocated for 'quality of government institutions' by a reputed agency that works for international investors. But the connection was perverse: countries with high ratings performed badly at poverty reduction! Good governance as defined by international investors - basically security of investments and reliability of commercial contracts -appears to be distinctively different from the more fundamental type of good governance that we have identified as pro-poor.

Lessons for donors include:

• Donors need to undertake political analysis to understand the actual workings of the political systems in the countries where they operate. The economic logic of a particular project, program or policy intervention may be flawless, but political analysis may reveal an entirely different set of concerns and conclusions
• Donors need to undertake political analysis to understand the actual workings of the political systems in the countries where they operate. The economic logic of a particular project, program or policy intervention may be flawless, but political analysis may reveal an entirely different set of concerns and conclusions.
• Donors need to undertake political analysis to understand the actual workings of the political systems in the countries where they operate. The economic logic of a particular project, program or policy intervention may be flawless, but political analysis may reveal an entirely different set of concerns and conclusions.
• Donors must also recognise that they are, in fact, political actors. The choices they make about the countries in which to work, about whom they consult and with whom they deal are all highly political. Understanding who the potential participants in reform coalitions are in any given situation will allow donors to provide encouragement and support.
• Just as awareness of the social costs and environmental effects of alternative projects, programs and strategies has led both governments and donors to undertake their own social and environmental impact assessments, so donors should undertake political impact assessments before embarking on major projects and programs. Corporations often carry out political risk analysis and donor agencies could learn from this practice.
• Simplistic assumptions about formal democratic institutions or transplanting political standards of rich developed countries to developing country situations through conditionality will not advance the cause of poverty reduction. Donors need to acquire specific and expert knowledge about the political systems in which they intervene and the dynamics that drive them if they are to understand both the political determinants and consequences of their intervention.
• Developing the political capacities of the poor is a long-term enterprise which cuts against the grain of the donor mentality (and domestic politics in the donor countries) that wants to assess the ‘return on investment in aid’ over relatively short periods of time. In terms of policy intervention, donors might be best advised to adopt as a first principle, ‘to do no harm’. This implies that in some cases, rather than trying to promote pro-poor policy, they should instead encourage governments, in the first instance, to at least eliminate those aspects of current practice and policy that are clearly ‘anti-poor’.

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