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As part of a larger World Bank study on the empirical record of subsidy reforms, the purpose of this analysis is to improve the design and implementation of reforms and to integrate political economy concerns from the outset and not in a reactive manner.

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The analysis focuses on two aspects. First is the question of decision-making control. Second is the question of how organized interest groups can make their influence felt within government.

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Forward-looking research on the political economy of reform implicates national policy decisions in areas that are intrinsically politically sensitive. It is crucial to be aware of the political sensitivities surrounding think tanks, institutions, and organizations, including international development organizations.

GOOD PRACTICE NOTE 9: Assessing the Political Economy of Energy Subsidies to Support Policy Reform Operations

For decades, policy makers have known that it is important to reform energy subsidies. Yet, in practice, there has been huge variation in the outcomes from reform efforts. Failures are often rooted in the inability of reformers to understand and overcome political barriers. Successes have come where governments and other important pro-reform policy actors have addressed the political economy barriers and opportunities for reform strategically.

This is the ninth in the series of 10 good practice notes under the Energy Sector Reform Assessment Framework (ESRAF), an initiative of the Energy Sector Management Assistance Program (ESMAP) of the World Bank. ESRAF proposes a guide to analyzing energy subsidies, the impacts of subsidies and their reforms, and the political context for reform in developing countries.