• Introduction

Livelihoods and market development

This paper focuses on an important gap in the conceptualisation and application of livelihood approaches. This gap refers to the lack of emphasis on markets and their roles in livelihood development and poverty reduction. It is argued that this omission is important as it can lead to failure to identify and act on market opportunities and constraints and on related institutional issues. This discussion focuses particularly on the Sustainable Livelihoods approach as developed and applied by DFID.

Firstly, this paper asserts the importance of markets and the private sector for pro-poor livelihood development as livelihoods and poverty levels for most people are dependent on a range of markets and private sector economic growth. Moreover, people identify problems with markets as critical to their livelihoods and markets can provide efficient mechanisms for exchange, coordination and allocation of various resources. However, markets often fail. This paper argues that recognition of these opportunities and constraints posed by wider market interactions is important to serve the interests of the poor.

By examining the reasons behind market failures this paper argues that conventional promotion of liberalised competitive market is often misplaced. A more imaginative approach is needed, rooted in stronger understanding of the importance and nature of institutional development in economic growth, with market development being one part of that institutional development.

It is further stressed that although improved market access is a critical driver of sustained and broad based poverty reducing development, it is not a sufficient condition for such development: other social, political and technical processes of change are also vital. It is important to note that expanded market access can also pose real threats to livelihoods of poor people. It is recommended that it is important to appeal to the following two different development communities:

• market skeptics should understand market potential, particularly for long term pro-poor growth
• market fundamentalists are required to understand the problems of market based development, and ways that they can be addressed.

This paper then finally concludes with a brief illustration of the above mentioned arguments through a desk study on rural market development in Africa.

• Full text of document
• Publisher details
• Send to a friend