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Natural Resources Institute (NRI)

Pro-poor rural economic and enterprise development:
A framework for analysis and action (REED)

Final Report
DFID Poverty Oriented Research Programme, R8369 (NRI: C1731)

Dr. Junior Davis

Natural Resources Institute (NRI), University of Greenwich

December 2006

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About the project

This project focuses on new pro-poor local economic and enterprise development mechanisms for public policy and interventions to enhance poverty outcomes and growth in developing countries. Preliminary work undertaken through a multi-donor initiative has developed a framework which has benefited from further analysis, development and piloting. The model and good practice generated aimed to guide the development community and national institutions in their support to pro-poor local economic and enterprise development. The application of the Rural Economic and Enterprise Development (REED) framework should provide guidance on pro-poor public policy and institutional support at local and national government levels specifically in South Africa and Bangladesh. The project has also formulated strategies which incorporate the development of key institutional processes conducive to pro-poor growth based on findings from the analysis conducted within the project.

The purpose of this project is to promote policies that support, guide and evaluate 'pro-poor' rural and local economic development across a range of less developed countries and transition economies in which the UK Department for International Development (DFID) is active. This project was funded by the DFID through the Central Research Department. For more information, please click here.

The research aims

The research aims to develop further a conceptual framework and project tool for the fostering of rural economic and enterprise development in developing and transition countries. Local economic and enterprise development has to overcome multiple institutional and government obstacles at the macro, meso and micro levels.

The conceptual framework, building on the experiences and lessons learned from practical experience in rural projects, consists of ten cornerstones for intervention. These are clusters of successful elements of intervention approaches dealing with rural economic and enterprise development. The cornerstones can be broadly classified into four categories:

  • Policies and institutional framework
  • Infrastructure, services and markets
  • Entrepreneurial competence
  • Stakeholder involvement and linkages
The cornerstones represent the core functions that must be provided for successful, selfsustaining rural economic and enterprise development processes. The framework is based upon the principle of systemic interaction, so that each of the cornerstones is critical for the success of policies, programmes and projects.

For each of the ten cornerstones, the core elements, key strategies and ways of implementation have been identified in an iterative process, building on the collection of available information and experience-based knowledge. The format is open-ended, allowing the addition of new strategic elements and case study material, which will be developed as part of this research project. The cornerstones presented in Figure 1 are:

Figure 1 Rural Economic and Enterprise Development Cornerstones

Although project and programme initiatives aimed at improved economic and enterprise development is incorporated within the REED framework, it looks beyond particular interventions by focusing on the institutional architecture. Thus, even where particular interventions make sense (e.g. economic diversification), the right institutional architecture will be vital to its success; particularly in supporting the private sector. With the increased emphasis that government institutions and donors place on local economic development, enhanced rural-urban linkages and growth, it is of paramount importance to (where necessary) streamline the institutional framework, and/or improve coordination to optimise efforts and reduce duplication between different role-players for the benefit of enhancing economic growth and the development of the private sector.

The project aimed to:

  • Contribute to the improvement of sustainable rural livelihoods in developing economies by assisting government and civil society (public sector policy, investment and institutional) efforts to enhance the rural poor’s access to employment and SME opportunities through strategic advice, the development of best practice, evidence based research and dialogue through policy forums and networks.
  • Promote the participation of the poor into policy processes and fora for discussing the fostering of rural economic development through rural non-farm enterprise.
  • Strengthen the links between the current REED framework and in-country policy and programme processes, through regional workshops, seminars and shared learning/-training platforms.
  • Elaborate on the ingredients for a 'REED guide for program design' in rural and local economic development based on key success factors, promising approaches and practices.
  • Evaluate the effectiveness and efficiency of existing enterprise initiatives (credit programmes, employment programmes) in promoting pro-poor growth and reducing poverty.
  • Foster the development of coalitions between local, national governments and donors to identify strategic linkages and partnerships both within the public sector and between private and public undertakings to promote employment, SME development and pro-poor growth.
These objectives were pursued through a range of activities including literature review, primary data collection in selected case study locations, workshops, technical reports, policy studies and policy advocacy activities.

Project components

The project has four key components:

  1. Refine and develop the conceptual framework so that it can address gaps in the framework
  2. Pilot the approach in Bangladesh and South Africa in the form of in-depth case studies including training for local development practitioners and government in utilising the framework as a pro-poor REED programme planning, design and evaluation tool
  3. Make widely available a robust framework and set of tools for use by the development community including national institutions
  4. Methodologies and diagnostic methods development and validation for local economic and enterprise development
The research outputs develop several options for applying the framework which should improve rural economic and enterprise development policy and programme effectiveness in PRSP and non PRSP countries. The development and promotion of the rural non-farm economy, local economic and rural enterprise development has featured significantly within DFID’s work and that of the wider donor and NGO community. This work in part builds on the team's recent and extensive work on the rural non-farm economy -

The direct beneficiaries are intended to be the donor community and national governments in the target countries. These institutions should benefit in terms of their enhanced capacity to devise policies and interventions that enhance the poverty-reducing impact of local economic and enterprise development interventions in developing and transition countries. Ultimate beneficiaries will be the poor in those countries where such policies and interventions are taken up.

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