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Zoom out! Why a systemic perspective matters in economic development – more than ever

by on Nov 21, 2011  |  posted in Enterprise Development  |  1 Comment
At this year’s SEEP Annual Conference, the central theme of the Enterprise and Market Development Systems workshops was how to make better sense of markets and their actors’ behavior by looking beyond the pure economic logic of these systems. The key messages:   

 

What follows is a recap of the four Enterprise and Market Development Systems sessions. The workshop presentations referenced below are available here, under workshop track five.

Understanding, Influencing and Responding to Private Sector Motivations for Pro-Poor Impact in Bangladesh and East Africa

[caption id="attachment_503" align="alignright" width="300" caption="Dairy plant supported by Heifer International in Kiboga, Uganda."][/caption] Relationships with the private sector were the focus of two of the four workshops in the track. The first session featured cases from Bangladesh and East Africa in which development organizations successfully worked together with the private sector to upgrade the dairy value chain, doubling the dairy-related income of nearly 200,000 households. What makes these cases more systemic then others? Let’s take the CARE project in Bangladesh as an example. What I found remarkable about this project is how the team explicitly included intangibles in their theory of change, and, in turn, their work to improve relations in the value chain. Intangibles in this specific case were trust, risk and uncertainty, knowledge and skills, and transparency. By successfully working on the level of intangibles, the project succeeded in building trust and long-term relationships among small-scale milk producers, milk collectors, and a big dairy company. The East Africa Dairy Development Project, presented by its lead implementer Heifer International, also reported a significant impact at the farmer level. The project stressed the importance of social transformation, which was achieved through building cooperatives.

Market System Facilitators Engaging with Corporates - Opportunities and Risks

This session started off with two bold statements:
      • “Development organizations should think twice before engaging with corporates!”
      • “Donors should not give their money—especially tax-payers’ money—to big business!”
[caption id="attachment_500" align="alignleft" width="300" caption="CARE's intervention in partnership with Cargill to increase cocoa production in Bahia, Brazil."][/caption] These two statements are often heard in the development community, but they contrast with the reality of an ever-increasing number of projects working with the private sector. After looking at one exemplary case from Brazil, discussions focused on the risks and opportunities of working with corporates - risks not only for the poor populations in developing countries, but also for the credibility of the development organization itself. My take-home from this session is that corporations are an undeniable part of the system we are working in, and they can be a powerful ally. The motivations for corporate and development organizations to work toward a common target may not be the same, though, so careful negotiations are key. This session also illustrated the need to widen the view on the system, and to search for solutions from different new perspectives, e.g. the ones of corporations.

"Lock and Load" without the "Crash and Burn": Using Systems to Find the Most Effective Entry Points into a Value Chain

[caption id="attachment_475" align="alignright" width="300" caption="Practical Action's participatory market mapping approach."][/caption] I participated as a speaker in the third session, which covered how to better embrace complexity and use systems thinking to find the most effective entry points into a market. The workshop started off with examples of how complex systems often work in unexpected and counterintuitive ways, leading to results such as the tortilla riots in Mexico or the riots in London. The behavior of complex systems can be observed not only on a global level, but also in more local systems such as markets. How can we make more sense of the systems’ behavior? In the session, two specific methodologies were introduced to tackle this issue. The first approach, the participatory market mapping method developed by Practical Action, harvests the knowledge of market actors themselves to make sense of the market system. I introduced the second approach, the causal loop analysis, which is embedded into a methodology called the System Dynamics Analysis. This tool helps to makes sense of the non-linear behavior of a system and analyzes the feedback loops responsible for that. The third part of the session offered insights into USAID’s work in the field of systems thinking and complexity, as well as the major opportunities and challenges of introducing this new paradigm in the international development field. This session put a spotlight on the need to adopt a systemic perspective in development, and embrace the complex reality.

Models for Reaching Vulnerable Populations in Market Development Projects

The final session featured a colorful mix of case studies in four countries (Indonesia, India, Kenya, and Jamaica) supported by SEEP’s Value Initiative. The main focus was on mechanisms to better include the poor population in value chain activities, including social insurance, access to identity cards, and leveraging existing social networks to provide entry into new markets. All these examples had one thing in common: as with the “intangibles” mentioned in the cases from Bangladesh and East Africa in the first session, the Value Initiative projects looked at or successfully influenced factors that might not have been given importance with a focus on commercial incentives. These factors included trust, identity, and peace-building. Once again, a broad view on the market systems was necessary to successfully reach our common target of poverty reduction. __ More information on Marcus’s presentation is available here at his blog. Further reading on the third session, “Lock and Load,” can be found here on Microlinks’ blog. 
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