The world of Market Systems Development can often feel full of ‘jargon’ which can alienate newcomers and create barriers to those wanting to adopt (or encourage others to adopt) the approach.
This glossary is designed to help cut through complexity and get straight to the definition, explanation and meaning behind some of the key terminology and phrases used.
Taken from the Operational Guide for the Making Markets Work for the Poor (M4P) approach (also known as the ‘Red Book‘), the following are definitions of key terms used in Market Systems Development (MSD).
The maximum proportion of a population that has access to a basic service at a given point in time. The frontier may shift over time, e.g. as the result of innovation and/ or behavioural changes in the market system.
Development organisations – funded by aid or other non-commercial sources – that act as funders or facilitators with the aim of developing market systems.
When one party in a market transaction (on the supply-side or demand-side) knows more than another.
A characteristic of monitoring and measurement that explains how observed systems-level changes, pro-poor outcomes, and poverty reduction are linked to intervention activities.
The exchange between providers (supply-side) and consumers (demand-side) by which goods and services are delivered at the heart of a market system. The medium of exchange can be commercial or non-commercial (e.g. the accountability mechanism between the ‘setter’ and ‘receiver’ of a regulation) and formal or informal (e.g. barter-based trading).
Is the process of stimulating a number of (diverse) market players to react to the (nascent) system- level changes instigated during the piloting process. It results in greater ‘breadth’ (e.g. more and improved growth, or basic service benefits for the poor) and greater ‘depth’ (e.g. supporting functions/rules that respond to the new market system context). See also ‘Market system change’.
A method of understanding how a market system works and exactly why it fails to better serve the poor prior to intervening in it. The aim is to identify the root causes of market player under-performance and the functions/rules most in need of redress.
An innovation (see below) that helps create a new or improved behaviour, practice or technique which modifies or transforms the market system status quo by displacing – over time – an earlier behaviour, practice or technique.
A catalyst or agency of (systemic) change or reform. Drivers of change may be individual or institutional champions of reform, or the product of the interaction between structural features, formal and informal institutions and individuals that gives rise to a process of reform.
A good or service that is not paid for directly but is included or hidden within an exchange of another good or service that is paid for.
Spill-over effects impacting on parties that did not choose to be affected by them. These can be costs or benefits.
The temporary actions of a facilitator to bring about system-level changes and develop market systems for the benefit of the poor.
A development agent/agency seeking to stimulate market system change, tasked with remaining outside of the market system they are intervening in. In developing market systems, facilitators actively avoid distorting those systems and must be conscious not to make market players reliant upon their continued presence.
The material, social, or purpose-oriented motivations set for (or held by) individuals, groups, and organisations that shape attitudes towards risk and reward (e.g. with respect to performing market functions and/or changing what they do).
New or improved behaviour, practice or technique adopted by a market player as a result of programme intervention that confers a benefit to the poor. These can be goods or services and/or new roles that support a different way of working.
Structures and mechanisms of social, political and economic order and cooperation, either formal or informal, which shape the incentives, capacities and therefore behaviours/practices of market players.
A defined set of temporary activities through which facilitators seek to effect change in a market system.
An acronym derived from the phrase ‘making markets work for the poor’ and used by some in reference to the market systems development approach.
A set of arrangements by which buyers and sellers are in contact to exchange goods or services; the interaction of demand and supply.
When the intervention of an external agent creates perverse incentives among market players contrary to what is required for such players to uphold and build upon pro-poor changes.
Any organisation or individual in the private or public sector, civil society/community groups, social enterprises, representative organisations, academic bodies etc. that is not sustained by donor finance.
A multi-function, multi-player arrangement comprising the core function of exchange by which goods and services are delivered and the supporting functions and rules which are performed and shaped by a variety of market players.
A change in the way core functions, supporting functions and rules perform that ultimately improves the poor’s terms of participation within the market system. Also referred to as ‘systemic change’ or ‘system-level change’. The four core elements which together define market system change are:
Adopt: an element of the systemic change framework referring to the state of market system change when a market player(s) has successfully adopted a behaviour/practice change to the ultimate benefit of the poor producer/worker/ consumer, recognises the value of continuing with these changes irrespective of programme inputs, and has accordingly made plans to invest in upholding these changes and cover any associated recurrent costs.
Adapt: an element of the systemic change framework referring to the state of market system change when the market player(s) that adopted the behaviour/practice changes pioneered during the pilot has made qualitative and/or quantitative investments that allow them to continue with or augment changed practices, without programme support. These actions, independent of the programme, constitute an ‘acid test’ for whether pro-poor outcomes will be sustained.
Expand: an element of the systemic change framework referring to the state of market system change when a number of market players similar to those that pioneered the pro-poor behaviour/practice changes have adopted comparable changes
– either direct copies or variants on the original innovation – that are upheld without programme support.
Respond: an element of the systemic change framework referring to the state of market system change when the emergence and continued presence of the pro-poor changes lead market players in supporting systems to react by re- organising, assuming new/improved roles, developing their own offers, or repositioning to take advantage of opportunities that have been created. This response enables pro-poor behaviour/ practice changes to further evolve. It indicates a new capability within the system and suggests it can support pro-poor solutions to emerge and grow in future.
A set of principles, frameworks, and good practices that guide both analyses of market systems and developmental interventions which bring about pro-poor change within them.
Goods or services which are non-rival and non-excludable and therefore cannot be offered by private firms. Sometimes referred to as public goods.
An acronym for monitoring and results measurement.
Individuals within a population whose uncommon but successful behaviours or strategies enable them to find better solutions to a problem than their peers.
The market system where the poor – the programme’s target group(s) – exist as producers, entrepreneurs, workers, and consumers.
A dedicated intervention utilising external and temporary resources with the aim of transformational change in a market system that leads to improved socio-economic welfare of the poor.
A development outcome (e.g. improved growth or basic service access) the benefits of which impact upon the poor more than the less poor.
An indirect measure or indicator that approximates or represents a phenomenon when a direct measure or indicator is difficult or prohibitively expensive to determine, or is absent.
A model showing the chain of causality through which a programme’s activities lead to poverty-reducing benefits. Results chains are tailored to specific interventions and are consequently more detailed than a strategic framework (see Strategic framework).
A magnitude of action (i.e. the scale and intensity of a facilitator’s interventions) consistent with the norms and context of the market system in question. This is a key facilitation consideration for programmes to gauge programme ‘inputs’ in the context of both partner and target group benefit
Formal (laws, regulations and standards) and informal (values, relationships and social norms) controls that strongly define incentives and behaviour of market players in market systems.
The logical connection between different levels of objectives (output, outcome, impact) that links a programme’s intervention aimed at inciting market system change to pro-poor growth / improved service usage, and consequently, to poverty reduction.
A range of context- and sector-specific functions that inform, support, and shape the quality of the core function and its ability to develop, learn, and grow.
Market systems whose performance has a direct influence on how the market players in the principal market system behave and perform. Supporting market systems have their own core function, supporting
The capability of market systems to respond to changes and provide a means by which poor women and men can continue to derive social and economic benefits, beyond the period of intervention.
See Market system
See Market system change
A narrative of the programme’s strategic framework explaining the series of cause-and-effect changes following intervention activity. This represents the programme’s vision of how market systems will be functioning in the future, the pro-poor outcomes it results in, and the anticipated poverty reduction impact.
Markets characterised by a level of competition in which a significant number of market players and/or relatively few ‘absent’ supporting functions and rules exist (though they may still be poorly performed).
Markets that are relatively uncompetitive in which there are few market players and/or a large number of ‘absent’ supporting functions and rules.
The costs of participating in exchanges, covering search and information, bargaining, and enforcement costs.
Using multiple methods to develop a more accurate view of how and how much change has occurred. Triangulation is a means of verification that removes the biases of individual tools and information sources and helps to give programmes confidence in the results generated by their monitoring and measurement systems.
