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Market Systems Diagnostics: A Structural Analysis

Introduction

In 2021, LINC, working with ACDI/VOCA and Honduran partners, undertook a novel analytical activity to model the many factors that influence economic growth in Honduras. Using an approach never applied before in this way, the activity helped produce targeted and actionable recommendations for policymakers and the business community. This blog introduces this approach in the hope that the process may serve the development community.

Market Systems

The USAID Transforming Market Systems (TMS) program in Honduras is a seven-year (2018-2025) activity designed to foster competitive, resilient, and inclusive market systems that support economic growth and provide economic opportunities that incorporate women, youth, ethnic minorities, people with disabilities, the poor, and other marginalized groups who are often excluded—or even exploited—by traditional market systems.

By applying systems thinking approaches, TMS seeks to understand, diagnose, and address complex market behaviors and relationships that contribute to inequality and lack of economic growth.

TMS is implemented by prime contractor ACDI-VOCA, and LINC serves as a strategic subcontractor. LINC supports TMS’s systems thinking and monitoring, evaluation, and learning (MEL) activities.

The Problem

In 2020, Honduras was catastrophically hit by the twin hurricanes Eta and Iota. Approximately 4.7 million people were affected, hundreds of roads and bridges were destroyed, and the agricultural sector reported losses of up to 80% (Relief Web, 2021). Overall, the impact of the hurricanes represented losses of about USD1.86 billion. These events took a serious toll on an economy already struggling from the impacts of the COVID-19 pandemic (CEPAL, 2021).

In the face of these challenges, the private sector, civil society, and government came together to identify and prioritize a set of reforms that would help Honduras overcome the multiple economic and social crises by achieving inclusive economic growth.

The Goal

Public and private stakeholders recognized the need to gather evidence and conduct rigorous economic analysis to ensure that development reform initiatives were properly addressed. To support these efforts, ACDI/VOCA and LINC began an analytical activity to better understand the many interrelated factors affecting the Honduran market system and produce comprehensive and actionable recommendations for policymakers that would improve market system performance, resilience, and inclusion.

LINC experts, working with TMS field staff and technicians, and in collaboration with the Universidad Nacional Autónoma de Honduras (UNAH) and the Consejo Hondureño de la Empresa Privada (COHEP), conducted a system mapping activity to look for the evidence needed to inform a public-private dialogue process that would guide the efforts to achieve the goal at hand.

Access the full paper to learn about the process and methodology used for the development of the Market Systems Diagnostics.

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