The politics behind economic development : A global political economy perspective on challenge funds

This study explores the economic development mechanism challenge funds through the lens of critical development theories. The challenge fund mechanism was established to present an alternative to traditional top-down development approaches, but with most previous research coming from a new institutional economic perspective, they have seldom been problematised from the perspective of critical development theories such as dependency theory, postcolonial theory and post-development theory. Using evidence from eight semi-structured interviews with stakeholders working with Sida-funded challenge funds or grantees of the funds in Kenya, the study has found that challenge funds (1) have helped professionalise and mature businesses and the business environment, (2) has decolonising aspects and moving beyond conventional development, and (3) presents a combination of market solutions and a post-development approach in development cooperation. From this, it argues that challenge funds have incorporated critical development perspectives into a liberal market solution and are utilising the market-based approach to facilitate bottom-up development. This includes working to reduce North-South economic dependency and placing agency in development cooperation onto local stakeholders, while improving efficiency in development funding.