Tackling poverty through trade and foreign direct investment

This briefing note reviews the market systems development approach, and how it can help inform trade and investment policies and programmes. While it has a wider application, it has been commissioned by the BEAM Exchange in response to DFID’s Bilateral Aid Review published in December 2016. The review articulates DFID’s high ambitions for turbo-charging trade through a bold package of pro-poor trade policy, embedding development within UK trade policy, and encouraging job-creating foreign direct investment (FDI) in frontier markets – including through the new ‘Invest Africa’ programme. DFID’s increased focus on trade and job-creating investment was further reinforced in DFID’s Economic Development Strategy published at the end of January 2017.

The purpose of this note is two-fold: (i) to discuss possible priorities for DFID in using trade and FDI to tackle poverty in low-income countries; and, (ii) to explore how the key tenets of the market systems approach could help increase the prospect of DFID’s and others’ trade-related policies and programmes contributing to sustained economic development and poverty reduction.