Getting Serious about Stakeholder Analysis Piloting Political Science Methods in World Bank Operational Work Barbara Nunberg January 26, 2005

Stakeholder Analysis Background Potential winners and losers of policy reforms can actively influence reform outcomes To account for role of politics, Bank has performed intuitive analyses of stakeholder preferences Need for more systematic political stakeholder analysis Pilot studies conducted by EASPR using the Expected Utility Stakeholder Model

Stakeholder Analysis What the Model Can Do Identify stakeholder positions on policy reform, weigh their potential influence and assess the strength of their commitment Data cross-checked for internal consistency and comparability Simulate round-by-round negotiations to gauge whether proposed reforms are feasible as designed Determine possible strategic options for optimizing reform levels using knowledge about political dynamics

How the Model Works Data Collection Process Interviews with country experts to define context and relationships related to reform issues – not opinions or predictions Defined policy issue Steps in the reform process, in order of difficulty List of stakeholders with an interest in the policy outcome and those with a veto Each stakeholder’s initial bargaining position Relative power of each stakeholder on this issue Salience of issue to each stakeholder

How the Model Works Simulation Bargaining Process Stakeholders try to influence each other to secure an outcome they see as favorable Model provides a round-by-round simulation of prospective political bargaining Predicts how key stakeholders will shift their positions Assesses the level of consensus in support of a particular outcome Estimates effect of different initial stakeholder positions on likelihood of reform success and level of policy consensus

Stakeholder influence = stakeholder resources * stakeholder salience Opposite extreme stakeholder position Extreme stakeholder position Stakeholder A position Stakeholder C position Stakeholder B position Round x: Stakeholder positions and influence are analyzed to determine the winning outcome based on each stakeholder’s expected utility. Iteration Model goes through risk propensity, stakeholder perceptions, policy proposals, and stakeholder policy shifts to simulate bargaining process. Outcome forecast, predicted timeframe Negotiations stop if stakeholders see no further gains from continuing discussions

Case Study – Anyland Procurement Reform Integral part of anti-corruption reform agenda Corruption in procurement pervades both public and private sectors Procurement process highly decentralized, allowing for individual discretion Prime Minister advocates modest reform, but a strong coalition of interests opposes it entirely

Anyland – Procurement Step One: Defining the Issue

Anyland – Procurement Step Two: Positions and Influence

Anyland – Procurement Step Three: Bargaining Dynamics

Anyland – Procurement Step Four: Anticipated Outcome

Anyland – Procurement Step Five: Potential for Further Reform Re-analyzed using various donor starting positions above and below current positions Bank’s initial position a Restructuring of agencies dealing with large procurement items When lowered 1 step to support internal audits within ministries for improved enforcement a Successful negotiation with PM and other leaders for this level of reform Greater potential reform progress

Benefits of the Model (1) Wide applicability Has been used to analyze a diverse set of negotiated issues from business to economics to politics Can be applied to various areas of Bank work Accuracy rate Approximately 90% in real-time prediction of thousands of cases since 1981 More accurate than traditional methods using expert opinion

Benefits of the Model (2) Structured format for data collection Predicts the types of coalitions that may form in support of various levels of policy reform Allows dual analysis of a macro issue along with its component policy parts for better reform targeting

Limitations of the Model Garbage in, garbage out a Quality of data collection is critical Shortage of qualified experts on some issues Need for in-depth country knowledge Operational utility depends on close alignment with country program tasks Ability to forecast has not yet been tested for Bank-related policy issues No in-house capacity to run the model

Next Steps Establish framework within country operations for ongoing application of these techniques Pilot studies on additional country issues Develop in-house modeling capacity Assess further experience, including accuracy of forecasts and recommendations