recent World Bank support to public sector reforms against the backdrop of fluctuating government commitment. However, long-standing involvement of team members can also have drawbacks. In one case, the World Bank had a significant and long track-record of supporting public sector reforms. Because these had been seen and reported as successful, emerging disappointment about results and heightened concern about governance was challenging to acknowledge for some time. This became easier as the team‘s composition changed.

In sum, project documents and interviews reflect that teams make some efforts to understand political economy challenges and likely dynamics over time. However, to date, the majority of these efforts are limited and implicit in nature and do not involve explicit analysis. Interviews and the review of ex-post assessments of operations also reveal incentives to under-state political economy risks in ex ante project documents; as well as some challenges with the implementation of mitigation measures aimed at increasing the demand from citizens and NGOs for public sector reforms. In several cases, experience gave Task Team Leaders a sense of potential challenges, as well as how the government‘s commitment was evolving over time. The final sub-section of the portfolio review drills deeper into the question of whether there are indicators that greater attention to political economy variables pays off in terms of operational performance.

# **III.3.2 Potential pay-offs from more explicit attention to political economy**

Several teams reported explicit adjustment in operational design and/or implementation based on their discussions about likely political economy challenges. Two teams that had invested in political economy analysis suggested the following implications for the project design: seeking a deliberate balance across project components, agreeing on rules of the game and being clear and open about these, making efforts to reach out to the parliamentary opposition<sup>42</sup> , agreeing with the government to undertake regular surveys of citizens‘ opinion on satisfaction with service delivery, and narrowing the scope of the project to what was deemed feasible based on lessons learned from earlier projects and the current analysis of reform context. Both operations that involved explicit political economy analysis _ex ante_ are currently rated as ̳satisfactory‘.

While not hard evidence, it supports the idea that taking political economy factors into account can be associated with better performance. This is also consistent with evidence from a sample of 17 public sector operations that were assessed in 2009 with regards to their relative attention to governance and political economy factors, and that were revisited with regards to their current performance for this paper.

In 2009, the Bank‘s internal Quality Assurance Group (QAG) undertook an initial review of how key aspects of governance and anticorruption are integrated into lending operations.<sup>43</sup> Three dimensions were covered: attention to Governance and Political Economy (GPE); Fiduciary Aspects (GFA); and the demand side of governance (DSG). Operations were rated on a six point scale ranging from (1) _very responsive_ to (6) _highly unresponsive_ . The GPE dimension was assessed by examining the adequateness of analysis of stakeholder interests and their underlying incentives; of formal institutions and informal rules; of the project‘s vulnerability to rent-

> 42 One team made an effort to understand and manage PE dynamics, but new political forces emerged unexpectedly. In another country, in contrast, the potential alternative party was readily identifiable.

> 43 In the context of the Bank‘s _Governance and Anti-corruption Strategy_ and _Implementation Plan_ launched in 2007.

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