Why do similar sets of formal institutions often have such divergent outcomes? An analysis of political settlements goes some way to answering this question by bringing into focus the contending interests that exist within any state, which constrain and facilitate institutional and developmental change. It provides a framework to analyse how the state is linked to society and what lies behind the formal representation of politics in a state.
The political settlement and the elite bargains from which it emerges are central to patterns of state fragility and resilience. The role of political organisation within the political settlement is crucial to both the stability of the settlement and the direction in which it evolves over time. The elite bargains that may lead to the establishment of what might be considered a resilient political settlement may also act as a barrier to progressive developmental change.
Its key findings are as follows:
- The ‘design of institutions’ (the rules and norms that govern behaviour), particularly formal state institutions, does not determine either political or economic outcomes. Democratic institutions in one state may be associated with violent conflict and economic stagnation, while in another they may be related to peaceful social relations and economic growth. It is the underlying political settlement which determines political and developmental outcomes.
- Understanding the political settlement provides a route to understanding the differential performance of states in the developing world and the directions reform might take when it comes to fundamental state functions.
- A focus on the ‘elite bargains’, which can be found at the centre of political settlements, provides an explanatory framework for understanding trajectories of state fragility and resilience, as well as how these relate to processes of development and poverty reduction. An elite bargain may be durable (or robust) allowing the state to achieve a significant monopoly over coercive force and a basic capacity for taxation and popular allegiance, but in doing so it may block further developmental advances.
- Incorporating an analysis of political settlements can take the very positive work done by DFID and others on understanding the ‘drivers of change’ in developing countries a step further. This lens allows an analysis of the contending interests that exist within any state, which constrain and facilitate institutional and developmental change. It provides a framework to analyse how the state is linked to society and what lies behind the formal representation of politics in a state.
- The political settlement and the elite bargains from which it emerges are central to patterns of state fragility and resilience. The role of political organisation within the political settlement is crucial to both the stability of the settlement and the direction in which it evolves over time. The elite bargains that may lead to the establishment of what might be considered a resilient political settlement may also act as a barrier to progressive developmental change.
- The anatomy of political settlements suggests that state-building is far from a set of technical formulas, but is a highly political process. Creating capacity within a state to consolidate and expand taxation is fundamentally determined by the shape of the political settlement underlying the state. This is true as well for the development of service delivery or any other function of the state.
- To undertake development assistance programmes without understanding the political settlement on which a state rests can lead to unintended consequences of all sorts. Not only does the political settlement set the constraints for what can and cannot be accomplished with foreign assistance, but foreign assistance itself can have an impact on the political settlement.
