The principle political economy constraints and opportunities to successful investment in inclusive agribusiness in Asia

This report looks at the evidence and the gaps in the evidence

Abstract

The purpose of this report is to inform a more detailed call down piece of work to scope the potential establishment of one or more investment platforms through which it would deploy investment capital in order to catalyse private investment in south and central Asia. It’s been proposed that the platform(s) should focus on clean energy, inclusive agribusiness and financial services. The aim is that the key political economy contexts/blockages are understood and the risks can be addressed in the design and pointers given as to where the most feasible investments may be made.

This desk-based study reveals abundant evidence for the importance of political economy considerations in the design of interventions to support agri-business. A key tension which presents itself in designing a possible investment platform is between the obvious and valid requirement for more political economy analysis and the desire to start moving and create impact. The latter will involve the actions such as: provision of finance for upscaling processing and for season inputs to farmers; training in use of technologies, in group formation; and training in market regulation; investment in processing infrastructure; market information and links to markets (especially local “modern retail” and export); consumer and producer safety etc. A way to address this tension in practice might be to emphasise learning by doing during implementation — i.e. building in good monitoring (with an emphasis on the political economy dimensions) and feedback loops to management decisions. A particularly valuable outcome would be a successful investment in a local private sector provider (e.g. of processing or finance, maybe also of contract farming services). Such investments can foster a dynamism which changes facts on the ground and shifts ideological preconceptions.

There is a consensus in the literature that longer term policy analysis/political economy studies are essential, ideally based on local and external research partnerships. A further step to be considered would be to explicitly take a longer-term approach (alongside programme implementation) to building up local analytical capacity and to have the latter as an explicit project output. This report gives a wide variety of issues which this work could focus on, to which no doubt others could be added. But the author would advise making investments alongside such longer-term analytical work, and building in close interaction between the two workstreams. This will add to the useful “learning from doing”. Equally important, by probing the frontiers of what is possible, it may suggest areas of work where constraints to progress can be overcome, and the economic landscape for agribusiness may be changed for the better by the kind autonomous developments discussed at the beginning of this report.

This report has been produced for Evidence on Demand with the assistance of the UK Department for International Development (DFID) contracted through the Climate, Environment, Infrastructure and Livelihoods Professional Evidence and Applied Knowledge Services (CEIL PEAKS) programme, jointly managed by DAI (which incorporates HTSPE Limited) and IMC Worldwide Limited.

Citation

Kydd, J.G. Evidence and gaps in evidence on the principle political economy constraints and opportunities to successful investment in inclusive agribusiness in Asia. Evidence on Demand, UK (2016) i + 23 pp. [DOI: 10.12774/eod_hd.january2016.kyddjg]

Evidence and gaps in evidence on the principle political economy constraints and opportunities to successful investment in inclusive agribusiness in Asia

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