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Understanding business, markets and states is critical to development globally

Published on 29 April 2020

The relationships between business, markets and states shape economic, environmental, political and social realities for everyone, everywhere.  These relationships are constantly evolving. As seen most recently in responses to the Covid-19 pandemic, the potential for either transformational or regressive forms of rebuilding from the outbreak depends on how states, businesses and markets shape one another. For example, the global scramble for medical supplies has exposed the limits of market forces, and governments and businesses have taken control of transnational value chains. To avoid developing countries being crowded out will require new modes of collaboration.

In a series of new short papers from the Business, Markets and State (BMAS) Cluster, IDS researchers explore how markets, value chains and collaborations between states and businesses both impede and accelerate progress towards sustainable development and more inclusive economies.

Making Trade Policy Inclusive

Research on trade at the Business, Markets and the State (BMAS) cluster at IDS employs political-economy analysis to understand the distribution of trade gains and losses – including the asymmetries along power dimensions and how winners and losers of international trade are affected by frequent policy changes. Our research also covers the South-South trade and the increasing role it plays within the (sustainable) global trading system – together with traditional North-South trade.

Our research also reflects the growing need for an inclusive trade agenda, which builds on a progressive trade policy and which is linked to transparent trade negotiations, trade frameworks, trade institutions and governance, and trade support mechanisms. Our cluster is applying this expanding understanding of the intricate link between the political economy of trade and its development outcomes to discern the policy implications. As such, the cluster is working with various donors and international organisations to publicise the need for development cooperation programmes.

Read more about the BMAS Cluster’s work on trade policy

More and Better Work for All

Work is relevant for incomes, productivity, and dignity. It is one of the most important business contributions for development. However, unemployment, underemployment, precarity, and a lack of decent jobs remain a major development challenge. The market does not automatically deliver more and better jobs. It is crucial to understand how economic, political, and social dimensions influence job outcomes.

The Business, Markets and the State (BMAS) research work provides much needed evidence on the circumstances needed to create more and better-quality jobs through trade, and in enterprise-, value chain-, and sector development. Importantly, our research seeks to find how outcomes may vary between groups, such as marginalised groups or rural communities. Our research also looks for evidence how worker involvement in business decision-making creates the conditions for better work.

Read more about the BMAS Cluster’s work on work and employment

Why State-Business Relations Matter for Sustainable Development

As we enter the decade of delivery for the United Nations Sustainable Development  Goals (SDGs) there is wide agreement that together businesses and states have a critical role to play in accelerating progress towards goals such as zero hunger and ending poverty as well as plugging the global development financing gap of $2.5 trillion a year.

The work of the BMAS Cluster seeks to understand how the relationships between business and states work in practice, and how can they be made more effective for sustainable development outcomes.  The Cluster is also active in convening and facilitating dialogues between governments, international institutions, development banks and businesses, and advising partnership brokers.

Read more about the BMAS Cluster’s work on state-business relations

Governing Value Chains for Inclusive and Sustainable Development

The value chains that develop, produce and bring products to consumers have often benefitted more powerful actors such as multinational corporations over and above smaller actors such as firms and farms in low- and middle-income countries.  This has exacerbated economic and social inequalities within and between countries.

Analysing the potential for more inclusive value chains has been a key focus of IDS’ work for over 15 years. Collaborating with global partners, the BMAS Cluster has advised governments and international agencies on how to support poorer and marginalised communities to more effectively participate in markets and benefit from value chains in relation to nutrition, health and the environment.

Read more about the BMAS Cluster’s work on value chains

Making Finance Work for the Greater Good

Finance is essential to economic growth, but the immense expansion of financial markets – financialisation – has often had significantly negative impacts.  For example, financial crises, such as that of 2008, have reinforced and deepened inequalities, and thrown countries off paths to more inclusive and sustainable development.

Researchers in the BMAS Cluster are working to provide much needed evidence to governments, investors, businesses and foundations on the impacts of financial innovations such as impact investments, blended finance and microfinance in terms of creating jobs, improving wellbeing and achieving green transformations.

Read more about the BMAS Cluster’s work on finance

Transforming Food Markets for Social Good

Food is a human right but too many people are still unable to access good quality, nutritious food.  Yet simply producing more food does not address this problem and can lead to knock-on environmental issues.

The BMAS Cluster provides evidence and analysis on how food markets can be improved so that they provide nutritious and affordable food, produced sustainably, and that they are contributing to employment.  The Cluster has worked with food agencies, national governments and donor agencies to develop more effective and sustainable food and agricultural systems.

Read more about the BMAS Cluster’s work on food markets

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