Definitions for the most common terms and concepts to help you understand, plan and implement a market systems approach.
This is a living, growing glossary. The terminology around market systems development is changing continuously: many terms have multiple definitions, and some are even actively contested.
Market systems approaches: principles and characteristics
- Copying: other target enterprises copying behavioral changes that have been adopted by those affected directly by program activities (see DCED: Assessing systemic change).
- Core function: the central set of exchanges between providers (supply-side) and consumers (demand-side) of goods and services at the heart of a market system. The medium of exchange can be financial or non-financial (e.g. through accountability mechanisms or the ‘setter’ and ‘receiver’ of a regulation).
- Crowding in: enterprises at levels other than the target level copying behaviors that those affected by program activities have adopted or entering a sector or value chain as a result of improved incentives and environment created (at least partly) by the program. This term also applies to government agencies or civil society organizations, who are not directly involved in the program, copying behaviors of those who are directly involved in the program, or who change their behavior as a result of improved incentives or environment created (at least partly) by the program.
- Exit strategy: the plans that facilitators should have to make their eventual withdrawal from the intervention as smooth and painless as possible.
- Facilitation: the attempt by development actors to catalyze change in the market system while not assuming any long-term market function themselves. Their intervention role is temporary and catalytic. See the facilitation role.
- Inclusive market systems: market systems that engage and benefit a range of actors including the poor, women, youth, ethnic minorities and/or other marginalized groups who are often excluded — or even exploited — by traditional market systems.
- Innovation: new or improved behavior, practice or technique adopted by a market player as a result of program 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.
- Leverage point: a point within the system, whether a key actor, policy or relationship, where a relatively small amount of effort can be applied to create a significant change in the market system
- Market system: multi-function and multi-player arrangement comprising the core function of exchange and the supporting functions and rules which are performed and shaped by a variety of market players.
- Market systems approaches: approaches to poverty reduction based on the central idea that the poor are dependent on market systems for their livelihoods. Therefore changing those market systems to work more effectively and sustainably for the poor will improve their livelihoods and consequently reduce poverty.
- Pro-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.
- Resilience: market players can adapt models and institutions to continue delivering pro-poor growth as the market and external environment changes.
- Supporting functions: 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.
- Supporting market system: 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 functions and rules.
- Supporting rules: formal (laws, regulations and standards) and informal (values, relationships and social norms) controls that strongly define incentives and behavior of market players in market systems.
- Sustainability: the continuation of benefits from a development intervention after major development assistance has been completed. The probability of continued long-term benefits. The resilience to risk of the net benefit flows over time.
- Systems thinking: the principle of addressing the entire market system rather than just focusing on one part of it.
- Systemic change: transformations in the structure or dynamics of a system that leads to impacts on the material conditions or behaviors of large numbers of people.
- Adaptive Management: an approach to implementing the program cycle that seeks to better achieve desired results and impacts through the systematic, iterative, and planned use of emergent knowledge and learning throughout the implementation of strategies, programs, and projects. See adaptive management.
- Attribution: the ascription of a causal link between observed (or expected to be observed) changes and a specific intervention.
- Buy-in indicators: indicators which measure the degree to which market actors have taken ownership over the new business models, technologies, practices and behavior changes that were introduced and/or supported by the intervention.
- Diagnostic process: 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.
- Evaluation: systematic and objective assessment of an ongoing or completed project, program or policy, its design, implementation and results. The aim is to determine the relevance and fulfillment of objectives, development efficiency, effectiveness, impact and sustainability.
- Imitation indicators: indicators which measure the scale or breadth of program-supported behavior change within a system. There are two prominent examples of imitation indicators – crowding in and copying.
- Market map: a framework used to visualize the relationship and linkages between all of the different actors within a market system. See mapping your market.
- Monitoring: a continuing function that uses systematic collection of data on specified indicators to provide management and the main stakeholders of an ongoing development intervention with indications of the extent of progress, and achievement of objectives and progress in the use of allocated funds.
- Strategic framework: the logical connection between different levels of objectives (output, outcome, impact) that links a program’s intervention aimed at inciting market system change to pro-poor growth / improved service usage, and consequently, to poverty reduction. See a framework for change.
- Theory of change: is a narrative of the program’s strategic framework explaining the series of cause-and-effect changes following intervention activity. This represents the program’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.
- Value for Money: generally used to describe an explicit commitment to ensuring the best possible results are obtained from the money spent.
- Conflict- affected environments: countries or regions where there is a high risk of violent conflict breaking out; that are in the midst of violent conflict; or have recently emerged from it, including countries classified as ‘post-conflict’.
- Marginalized actors: actors who form part of the system – play roles in it and derive an income from it – but who face disadvantages due to their lack of bargaining power, knowledge, political influence, social status, income, etc.
- Thin markets: markets that are relatively noncompetitive in which there are few market players and/or a large number of ‘absent’ supporting functions and rules.
- Women’s economic empowerment: definitions generally include the following – economic advancement; access to opportunities and life chances; access to assets, services and support needed to advance economically; and decision making capability in different spheres, including household finances.
Results and measurement
- Contribution analysis aims to provide the best possible evidence of how a program contributes to a set of desired outcomes. It is particularly useful in situations where traditional impact measurement designs are not feasible and for measuring the impact of complex programs in complex settings. (see Contribution Analysis, Better Evaluation).
- DCED Standard for results measurement: The Donor Committee for Enterprise Development (DCED) developed the DCED Standard, which specifies eight elements of a successful monitoring system for results measurement. A DCED audit, conducted by DCED-approved auditors, involves an external, objective assessment of the monitoring system in use in a program. The deliverable from the audit is an agreed report with percentage scores for achievement of the various elements of the Standard (see DCED Reader).
- Difference-in-difference is a statistical method used for measuring impact when using treatment and control groups: ‘Difference-in-difference involves comparing the before-and-after difference for the group receiving the intervention (where they have not been randomly assigned) to the before-after difference for those who did not.’
- Intention-to-treat analysis is an assessment of the people targeted by an intervention, based on the group they were initially (randomly) allocated to. This is regardless of whether or not they dropped out, were in full receipt of the intervention, or switched to receive an alternative intervention.Source.
- Instrumental variable technique is the, ‘option is used to estimate the causal effect of variables on an intervention… This option involves identifying instrumental variables; variables that impact on outcomes by affecting a key independent variable. The option can also be used to control for measurement errors.’ Source.
- Mixed methods approach integrate quantitative and qualitative approaches to theory, data collection, data analysis and interpretation. The purpose is to strengthen the reliability of data, validity of the findings, and recommendations. The approach also aims to broaden and deepen the gained understanding of the processes through which program outcomes and impacts are achieved, and how these are affected by the context within which the program is implemented (see Introduction to mixed-methods approach).
- Power calculation analysis is the probability that you will be able to find an effect, given that the actual effect is there. Source.
- Quasi-experimental research design involves identifying impacts by comparing before-and-after results for a treatment group who participate in an intervention with a control group, who do not. Candidates (typically people) for the control group are selected on the basis that, in other respects, they are similar to the treatment group. This purposive selection of candidates is what is characteristic of a quasi-experimental design. It contrasts for instance to a true experimental approach, where candidates for both treatment and control groups are selected randomly.
Different variants of quasi-experimental design:
Difference-in-Difference (or Double Difference): comparing the before-and-after difference for the group receiving the intervention (where they have not been randomly assigned) to the before-after difference for those who did not.
Judgemental matching: involves creating a comparison group by finding a match for each person or site in the treatment group, based on researcher judgements about which variables are important.
Matched comparisons: matching participants (individuals, organizations or communities) with a non-participant on variables that are thought to be relevant.
Propensity scores: statistically creating comparable groups, based on an analysis of the factors that influenced people’s propensity to participate in the program. Source.
- Spillover effects refer to impacts of a project on households or individuals who are not directly targeted by the project.Source.
- Theory of change / program theory / program logic / results chains: a program theory or theory of change (ToC) explains how an intervention (a project, a program, a policy, a strategy) is understood to contribute to a chain of results that produce the intended or actual impacts. Diagrams can be used to represent a program theory. These are often referred to as program logic, logic models or results chains, as they show the overall logic of how the intervention is understood to work.
- Theory-based evaluation approach is a way of structuring and undertaking analysis in an evaluation. It is a conceptual analytical model, rather than a set of specific methods or techniques, that relies on using an explicit theory of change to draw conclusions about whether and how an intervention contributed to observed results. (see Theory-based impact evaluation)
Glossary of Market System Approach