Effectiveness of market led development approaches in low and middle income countries: A Systematic Review
Effectiveness of market led development approaches in low and middle income countries: A Systematic Review

Nepal, one of the poorest countries in the world with 14% of its population living with less than $1.90/day (World Bank, 2010), has made small socio-economic progress in the last few years (ADB, 2016). It is also important to note that for those who have moved out of extreme poverty, the gains are often temporary. For example, climatic threats and such as an earthquake in Nepal and political uncertainties, have led many to slip back to extreme poverty (NPC-GON, 2015).

Under these circumstances characterised by high rates of poverty, inaccessibility to markets and lack of knowledge about market mechanisms there has been an increased interest in the implementation of market-led approaches to development.  Market-led approaches focus on the importance of identifying consumer needs and producing appropriate goods and services or catering to an appropriate market.

However, the effectiveness of market-led approaches to rural development still remains relatively understudied. Though interventions like micro-finance or rural infrastructure have been subjected to systematic reviews (e.g. Knox et.al, 2013; VanRooyen, 2012) other initiatives involving rural value chains, capacity building, information and knowledge sharing and other forms of financial support require further examination. In particular, given the predominance of the rural poor in LMIC countries it is important to assess the effectiveness and whether some lessons could be learnt for implementing the aforesaid market-led approaches in the context of the country of interest – Nepal.

The primary review questions guiding the review and informing the scoping exercise are as follows:

  1. What is the effectiveness of market led development approaches among the rural and semi urban population in LMICs?
  2. What are the factors which determine the success of different market led development approaches in subsistence and migrant driven rural economies?

An important objective of this systematic review was to apply the findings to a particular context – Nepal. The review indicates that the combination of interventions should be demand led backward linkages targeting with relevant and appropriate livelihood opportunities. It is suggested that rather than a generic prescription, efforts should be made to understand the existing supply chain in Nepal (for example, Non-timber Forest Products (NTFPs), eco-tourism, and seed production for high-yielding varieties), dominant players (for example, traders) and their linkages.

Emphasis on interventions that combine elements of rural value chains, capacity building and assets/cash transfer leads to a positive impact on economic outcome and strengthening of market linkages for the rural poor.

The intervention programmes should be oriented towards technical training, exposure to markets and its workings and financial support to link the subsistence poor to the markets. This review shows that one key component of rural value chain is creation of groups (mostly women) to carry out various market-led initiatives (for example, producer organisations).This could be an important intervention in Nepal provided sufficient attention is paid to the role of facilitator who plays an important role in the sustenance of the group.

It should also be pointed out that social and cultural context in Nepal, as it is the case with other SAR countries, might not favour women-led initiatives and hence it is imperative that they are supported by other members of the household. Thus, before the formation of women groups, steps should be taken to elicit support (by consultation, persuasion and demonstration) of key members of the households.

The interventions should also be targeted precisely at the ultra-poor as it is possible that rich and the elite of the rural economy can appropriate disproportionate benefits of such interventions. This requires prior planning and clear delineation of the target segment and creation of filtering mechanisms (for ex. appropriate documentary evidence of economic status) for precision targeting.

Programmes that focus on creating groups for enhancing market linkages should invest substantial time and resources to ensure identification and selection of facilitators. It is critical as these facilitators would play a substantial role in sustenance of the group and the eventual realisation of social outcomes like gender empowerment.

Policies and programmess that target women should ensure that the recipient is supported by members of her household. Resources to persuade and convince key members of the household should be factored in the plans.


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