This chapter - published in Developing Alternatives - explores why efforts to promote pro-poor growth often confront considerable challenges, how some of these challenges can be addressed, and how political economy analysis (PEA) can be used to improve approaches to pro-poor growth.

The question of how growth can be made more inclusive and broad-based is essentially a political and not purely a technical one. Pro-poor growth requires a state that is developmental in its orientation and can effectively perform key functions such as investing in public goods, ensuring the delivery of basic services, and providing an enabling environment for private sector investment.

Often, however, state structures in much of the developing world fall short in these areas. The successful promotion of pro-poor reforms may require changes in existing power structures and in the nature of the understandings and arrangements linking state and society. Where elites perceive that pro-poor change is likely to result in a relative loss of wealth or a challenge to established power relations, there are strong incentives to divert or block even the most well-intentioned policies. The prospects for reform thus depend on domestically driven processes of bargaining and contestation among different actors in state and society. Crucially, these are complex and long-term dynamics, and they cannot be engineered from the outside.

However, while donor influence may be limited, it is essential that donors understand the political economy factors at work and adapt their strategies accordingly so as to maximize the effectiveness of their efforts to promote pro-poor growth.