Access to markets and an effective private sector can catalyse development

Access to markets and the presence of an effective private sector are catalysts for economic development. At the local level, market access is important and form part of the broader issue of local economic development, which aims to build up the economic capacity of a local area to improve its economic future and quality of life for all (World Bank 2014).

In most developing countries but particularly where the BRACED projects are being implemented, the productive system is dominated by an important number of small enterprises often run by members of a unique household practicing rain-fed agriculture. In these countries, the agricultural production system is characterized by low productivity level and limited added value. Many factors can explain the absence of an effective and productive private sector including the fact that these countries are characterised by small or non-existing entrepreneur networks due to a lack of business development. Access to finance is also constrained. Financial institutions often ask for high interest rates and charges and rarely reach the most remote smallholders. A lack of hard infrastructure, including energy, water and transportation networks, prevent farmers from increasing productivity and being able to effectively trade in other parts of the country. The lack of weather and price information observed in many countries is also a barrier to production, productivity and competiveness. Finally, in BRACED countries, institutions such as legal, regulatory and financial systems constrain local economic development by failing to secure property rights, macroeconomic stability and a safe environment to do business.

Like financial crises and conflict, climate change and extremes present important risks for local economic development with multiple consequences on productive systems and the business environment. Extreme weather events and variability have a direct impact on systems of production by affecting agricultural yields, particularly where agriculture is rain-fed and therefore dependent on weather conditions. Climate extremes can lead to the degradation of infrastructure needed for local economic development such as roads, storage facilities and markets, therefore affecting activities at all levels of the value chain. However, the role local economic development plays in building resilience to climate change and natural hazards has not been well studied. The BRACED programme offers an opportunity to do so.

The research gaps identified in the literature and review of BRACED projects proposals suggests four sub-themes of interest within the markets and local economic development topic:

•  Enhancing productive capacity. How productive systems react to the climate extreme.
•  Improving integration in value chains. An analysis of the impacts of climate extremes along the value chain to identify ‘weak links’ and points of vulnerability.
•  Access to credit and innovative risk transfer mechanisms. The link between access to credit and vulnerability and how financial tools can help build resilience.
•  Access to markets. How physical infrastructure and legal and financial