The key challenge for private sector development in 2006 is showing tangible, significant results in poverty eradication. In this light, private sector development communities of practice are asking fundamental questions. Can market development deliver on its promise of large-scale, sustainable poverty reduction? If so, how can programs measure these results and widely disseminate successful strategies? If not, what are the alternatives? Is it better to focus only on opening markets through policy reform, or must programs also stimulate markets to respond? Can the poor compete in global markets, and if not, what are the alternatives? Are small enterprises and small-scale farms the best avenue for reaching the poor? Are massive transfers to the poor in fact a better solution than market development?
These big-picture questions have challenged donors, researchers and practitioners focused on making markets work for the poor to consider the underlying rationale of market development strategies1 and how to enhance their demonstrable and sustainable contribution to poverty eradication. How can programs be better designed and implemented to open and stimulate markets to drive economic growth that significantly reduces poverty? How can they put in place change processes with their own momentum to develop country markets and institutions? How can programs adapt to more challenging contexts, such as crisis-affected settings? How can programs better hold themselves accountable for achieving poverty eradication? Furthermore, how can practitioners package messages and evidence to reach audiences they may not currently be reaching, such as developing-country parliamentarians and donor-country taxpayers?
The 2006 Reader focuses on private sector programs that open and stimulate markets to generate significant and expanding benefits for the poor. The major lessons emerging from better performing programs are:
To achieve pro-poor growth, programs need to both a) open markets through business environment reform and b) strengthen the competitiveness of the local private sector to respond to open markets in pro-poor ways.
To achieve demonstrable, significant results in poverty eradication, programs need to reach scale by stimulating markets to replicate promising practices on a sustainable basis. They can do this by strengthening learning systems and commercial support markets, and by building the capacity of change agents to drive industry competitiveness.
This strategy is different than small-scale, subsidized enterprise development, and builds on market development approaches presented in this Reader and in similar venues. In 2006, the Reader presents the strategy of “market system development” as it is emerging from practice. The strategy and associated lessons are distilled from a range of communities of practice, interpreted in the strategic context of the critical questions and challenges raised by the professionals in more than 85 organizations who generously shared their work and views this year.
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