Development interventions, export sectors and the poor: Mixed results

This study, carried out as part of Danida's ReCom programme, examines a variety of interventions directed at increasing Low Income Country exports while benefiting the poor. The cases covered include export-oriented interventions aimed at benefiting the poor through a specific focus on the poorest countries (Least Developed Countries, LDCs), or on particularly vulnerable groups, or on particular sections of the population considered to make up the poor, such as smallholders and women factory workers.

LDCs and women factory workers have been targeted mainly through trade preference programmes with or without clauses on labour conditions, while vulnerable groups such as victims of conflict in fragile states have been targeted through programmes like the Kimberley Process aimed at eradicating trade in commodities where production is linked to prolongation of armed conflict. However, the most common type of export-oriented intervention aimed at benefiting the poor are micro- and meso-level interventions aimed at smallholder 'inclusion' in higher value global value chains. These have multiplied in recent years, particularly in sectors such as horticulture.

Although data problems restrict the conclusiveness of any analysis, it appears that trade preference programmes have had only limited success in achieving sustainable increases in LDC trade. Evidence also appears to show that they have been more effective in Asia than Africa, presumably as a result of the more dynamic performance of non-LDCs in the former region. Where labour clauses have been included in these programmes, results have been also uneven: in general, effects on wages and working conditions
are only evident where such clauses are linked to capacity building for exporters and clear incentives for them to improve conditions.

The Kimberley Process illustrates how inter-governmental initiatives that also embrace leading multinational companies and NGOs may have considerable short- and medium term impact on conditions faced by vulnerable groups. The study also considers the case for working through large multinational companies more generally in implementing interventions in Fragile States.

The experience of targeting poverty reduction through support to smallholder inclusion in high-value global value chains has again been mixed. In particular, interventions aimed at production for global horticultural markets have proved problematic. This is due to a variety of problems, the most central of which is underestimation of the medium-long term entry barriers faced by smallholders in these markets and failure to work with existing importers and exporters. On the other hand, examples are provided of successful interventions outside of horticulture. These targeted products and markets with lower entry barriers and worked mainly through existing actors. The study also notes the general neglect of farm labour in such interventions.

Finally, the study notes that qualified generalization in this area is hampered by the conventional forms of impact assessment that donors apply. A case is made for wider use of household surveys that can better establish whether poverty reduction has occurred, and types of data analysis that can help identify the mechanisms underlying observed reductions in poverty.