What works for market development: a review of the evidence

The review seeks to provide evidence on what works for market development and the results frameworks and results chains, by focusing on private sector development (PSD), financial sector development (FSD) and international trade interventions. It also identifies gaps in the evidence and evaluation, while providing recommendations on what needs to be further examined in evaluating market development projects. It also studies the use of instruments including capacity building, challenge funds, guarantees and direct funds, and evaluates their contribution to systemic market development.

Main findings:

• The need for Sida to critically examine its support for market development; some widely accepted assumptions forming the basis of donor programmes need to be supported with evidence.
• On PSD, private investment and private sector led productivity are necessary but not sufficient for job creation and inclusive growth and need to be supported with direct interventions.
• The M4P approach has good potential but needs to be examined further, more clarity is need on the definition of systemic change.
• On FSD projects, 'macro level evidence supports the view that financial stability and deepening play a vital, causal role in growth and poverty reduction', yet there is a need for evaluating projects across stability, deepening and inclusion aspects.
• On international trade, examination is needed on logic models and tracing effects to impacts, especially on the poor, and evaluating projects across trade policies, trade infrastructure, transport costs, trade facilitation, and more direct interventions in support of export promotion.
• On agricultural development, policies need to change as an economy develops from focus on input subsidies, to strengthening markets, and support for R&D .

Intervention description

The different interventions analysed include PSD related projects for increasing private participation in infrastructure, agri-business development, FSD initiatives for financial sector reform and strengthening, trade related projects for accession to WTO, establishment of authorised economic operators, export promotion and the creation of challenge fund for supporting pro-poor innovation. Each of the interventions whether PSD, FSD, or trade related, aim toward market development and growth in the private sector as an agent for development.

Evidence methodology

• Detailed and broad review of the literature in market development including PSD, FSD, international trade and agricultural development to develop theories of change (ToC) and peer review of different donor result frameworks is performed.  
• Result chains with outputs and impact and key indicators for each type of intervention, along with scrutiny of evidence from different cases. The analysis of results frameworks and chains is supported through inputs and insights from DFID and Work Bank evaluators.

Useful for:

PSD, FSD, international trade and agricultural development focused interventions. Creators and evaluators of market development theories of change, results frameworks and result chains.