At the Frontier of Practical Political Economy : Operationalizing an Agent-Based Stakeholder Model in the World Bank's East Asia and Pacific Region

Abstract

Reform programs sometimes falter because
 they are politically infeasible. Policy change inevitably
 creates winners and losers, so those with vested interests
 strike bargains to determine how far and how quickly reform
 should advance. Understanding these micro political dynamics
 of reform can mean the difference between a successful
 intervention that gains political traction and a
 well-intentioned gambit that falls short of achieving its
 developmental objectives. Donors like the World Bank have
 been searching for ways to take these political factors more
 fully into account as they design programs to support
 country reforms. This initiative sought to introduce a
 rigorous and operationally usable political analysis tool
 that could be systematically integrated into the World
 Bank's country programming cycle. The East Asia and
 Pacific region carried out a multi-country pilot of the
 Agent-Based Stakeholder Model. This innovative analytical
 approach entails a quantitative simulation of the complex
 bargaining dynamics surrounding reform. The model
 anticipates stakeholder coalition formation and gauges the
 political feasibility of alternative proposed interventions.
 This paper provides a review of the Agent-Based Stakeholder
 Model pilot experience, exploring what sets this model apart
 from more traditional approaches, how it works, and how it
 fits into the Bank's operational cycle at various
 stages. An overview of the Mongolia, Philippines, and
 Timor-Leste country cases is followed by an examination of
 policy-related insights and lessons learned. Finally, the
 paper builds on this East Asian pilot experience, offering
 ideas on a potential way forward for organizations like the
 World Bank to deepen and extend their political analysis
 capabilities. The paper argues that the Agent-Based
 Stakeholder Model, utilized thoughtfully, offers a powerful
 addition to the practical political economy toolkit.