Promoting economic transformation through Market Systems Development

What role does MSD currently play in promoting transformational change and how could the MSD approach be adapted or modified to better promote economic transformation in future?

To date there has been no comprehensive examination of how the MSD approach might be useful in promoting economic transformation: that is, in supporting the re-allocation of resources from low-productivity to high-productivity activities.

Although 85 per cent of MSD programmes are broadly aligned to transformational change objectives, they primarily support within-sector productivity, especially in agriculture.

This study has two main lines of inquiry:

• What does current evidence suggest about the role that donor-funded MSD programming plays in promoting both structural and intra-sectoral economic transformation?
• How could the MSD approach be modified or adapted, including through combinations with other forms of support, in order to better promote economic transformation?

The four sections of the report discuss:

• Drivers of economic transformation and alignment with market systems development
• Donor and development agency perspectives on using MSD to promote economic transformation
• How MSD practice could be modified or adapted to better promote economic transformation
• Conclusions and recommendations, focusing on practical implications and guidance for donors

About the study

This study was undertaken for the DCED Working Group on Market Systems Development. The report presents detailed findings based on a desk review and interviews with donor agencies.

Readers may also be interested in a parallel study commissioned by the DCED WG on Business Environment Reform called  Promoting Economic Transformation through Business Environment Reform