A defining feature of the MSD approach is that programmes focus on achieving lasting change in specific well-defined market systems.
Choosing which market systems to work in is not an exact science. You will often start with pre-determined ideas about where to focus. Regardless of the system or type of programming, it is vital to assess each candidate market system for its potential to:
- Impact large numbers of people living in poverty
- Increase economic opportunities or improve access to basic services
- Stimulate enduring system-level change
Selecting market systems will generally involve the following stages:
Preliminary scoping and prioritisation
As outlined in ‘Setting the strategic framework’, start by defining the overall development goals of the programme and select market systems where improvements will most effectively contribute to these goals.
You can begin by conducting a broad scan of the economy to identify potential market systems to target. Consider sectors with a significant number of participants, potential for growth and relevance to the target population. Early sources can include national development strategies and priorities, existing economic analyses and sector studies as well as high-level consultations with key stakeholders in government, the private sector and the development community.
This guidance on sector selection for decent work suggests how to scope sectors from a decent work perspective, using cases from Peru and Afghanistan.
Developing a ranking criteria
Develop a way of ranking different market systems you could engage with based on your programme objectives. This may include for example:
- Reach: number of individuals working or accessing services in the market system (especially from the target population).
- Growth potential: opportunities for increased productivity, innovation and market expansion.
- Potential for systemic change: likelihood of achieving lasting and inclusive changes in the market system.
- Feasibility: the practicability of addressing key constraints within the limits of your programme's resources and timeframe.
This good practice note on sector selection provides quick guidance on selection, with particular emphasis on how to compile a shortlist of sectors.
Initial screening
Apply the preliminary ranking criteria to narrow down the list of potential market systems to a manageable number (e.g. 3-5). For each of the shortlisted market systems conduct a detailed market systems analysis to understand key actors, relationships and constraints, mapping the different types of actors involved. For more, visit the guidance page on conducting a market systems analysis.
Use a scoring matrix or similar tool to systematically evaluate and rank the shortlisted market systems based on the detailed selection criteria. Prepare a clear and well-documented justification for the selected market system, outlining the rationale for the choice and the expected development outcomes. An example from Chapter 1 of the Operational Guide to the M4P Approach can be found below:
This Market systems selection tool offers a simple Excel template to support a sector selection ranking exercise.
Selecting market systems is an iterative process. Market systems are complex, and their dynamics can, and do, change rapidly. If a market system initially satisfies your selection criteria, progress may yet prove difficult in practice. To ensure that MSD programmes do not lose their focus on the underlying causes of market failure, it is important to re-assess fit with the selection criteria throughout the programme cycle.