The political economy of pro poor growth - ODI Briefing Papers 35 - Briefing papers

• A state must be developmental in nature if it is to enable a pace and pattern of growth which is pro-poor • Institutions matter — attempts to reform or build robust pro-growth institutions must first identify a narrow and specific set of ‘growthenhancing’ institutions, and then support them • Overt opposition to pro-poor change is less common than indifference, and the wealthy can often be persuaded to support pro-poor policies, particularly if they see changes as being in their interest P ro-poor growth — growth that benefits the poor — relies on the state providing an enabling policy environment. Evidence from East Asia, where propoor growth has occurred, suggests that the government’s role in enabling such growth has resulted from the provision of public goods and social protection mechanisms, and the creation of institutional conditions for more inclusive and equitable development. Achieving this requires that policies be adopted and implemented effectively, which in turn means that there must be institutional and governance structures that are capable and willing to devise, operationalise and implement such policies. However, reaching this point of effective policy-making might require changes to the political settlement between the state, the private sector and civil society. For donors to support such changes, they need to have a good understanding of a country’s political economy, power relations and drivers of change. Their support needs to strengthen the demand for pro-poor change and the capacity of the state to respond to such demands. This paper focuses on the political economy challenges to making growth policies pro-poor. It explores: the importance of governance, institutions, the developmental state and corruption in setting the conditions within which pro-poor growth becomes possible (or not); the role of power sharing and downwards accountability in pro-poor policy formulation and implementation; key challenges in policy formation and implementation; and implications for donor and government action.