Political settlements analysis and the study of pro-poor development: Laos and Rwanda compared

Political settlements analysis is a framework that helps us understand different development trajectories. While it has been used to study the politics of pro-poor growth, there has been little explicit engagement with the economic mechanisms that may alleviate or reproduce poverty. This article extends the political settlements approach to that effect and presents a new, integrated framework to account for pro-poor economic development by conceptualizing political conditions as well as key mechanisms – employment and social provision – linking growth and poverty. This framework is empirically applied to scrutinize two recent development ‘success stories’, those of Laos and Rwanda. Both countries have emerged from a violent past to record over two decades of fast economic growth. The paper assesses how they have done so and to what extent their development strategies have been pro-poor. We demonstrate that the combination of economic growth and of centralized and ideologically committed ruling coalitions has enabled large-scale investments in social service provision that have spearheaded significant reductions in multidimensional poverty in Laos and Rwanda. Moreover, key governance capabilities have enabled both countries to achieve a certain degree of structural change. Yet, this change has been misdirected to extractive industries and hydropower (Laos) and high-end services (Rwanda) with weak employment and limited forward and backward linkages, compounded by a relative lack of productivity growth in the historically more relevant agricultural and manufacturing sectors. This has intensified land pressures and vulnerability, leading to increased inequality in Laos and sustaining already high levels of inequality in Rwanda. Using the ambitious conception of pro-poor development that underpins our integrated framework, we problematize these growth trajectories and argue that neither of them has been pro-poor. We recommend that researchers advance political settlements analysis to examine and strengthen the possibilities for social justice-oriented and bottom-up pro-poor development strategies more systematically.