Political Economy Analysis – Department of Foreign Affairs and Trade (2016)


Political economy analysis compliments other analytical work to give a greater understanding of context, including barriers to change, and how power and decision-making is exercised. The purpose of this DFAT guidance note is to give an overview of the importance of political economy analysis by exploring the variety of approaches and discussing why political economy analysis matters. Most importantly, this note offers guidance for how to plan, commission, and undertake political economy analysis in practice. Additionally, this note can assist with understanding how to integrate political economy analysis into the aid management cycle, as an ongoing iterative process. To achieve this, this note covers five areas: (1) what is political analysis?, (2) why does political economy analysis matter?, (3) approaches to political economy analysis, (4) planning political economy analysis, and (5) undertaking political economy analysis.