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.