Business Environment Reform and Poverty: Rapid Evidence Assessment, DFID, October 2015.
|Funding agency(ies)||Department for International Development (DFID)|
|Date completed||October 2015|
This rapid evidence assessment (REA) poses the following question: What is the evidence on the direct impact of business environment reforms on poverty? It focuses on the poverty impacts of business environment reforms in terms of increasing incomes and employment.
The evidence confirms that the links between business environment reform (BER) and poverty reduction are not direct. No studies were found that attempt to present evidence of a direct link between BER and poverty reduction. Instead, there is evidence on the links or channels through which BER has been found to indirectly contribute to poverty reduction.
89 documents were selected for quality assessment based on their relevance to the research question and were subsequently found to be of High or Medium Quality. The size of the body of evidence is considered to be Medium-to-High and it is moderately Consistent. Thus, on the balance of these factors, there is a Medium body of evidence connecting BER indirectly with poverty.
Two causal links were explored to examine the means through which BER affects poverty:
1) In the first, BER is considered to directly affect the decisions made by businesspeople leading to increased firm investment.
2) The second causal link explored examined the evidence on how BER affects economic growth.
Drawing from the evidence reviewed, the paper provides a brief overview of the potential success factors for BER that is designed to reduce poverty in developing economies:
- Integrate BER with macro-economic reforms: a key factor in realising the benefits of macro-reforms is to ensure BER is closely integrated with these programmes.
- Complement reforms with support interventions: attention should be given to issues such as access to finance and information, as well as to labour productivity.
- Pay attention to the BE barriers faced by women: women may not fully benefit from BER in the same way men are and reforms need to be designed, managed and monitored in a gender-sensitive manner.
- Formulate country and culture-specific reforms: there is a clear need for country and culture-specific approaches to BER in which donors take a long-term view, seeking to build consensus among stakeholders in order to ensure that reforms are viewed as legitimate.
- Broaden the scope of desired impact: broaden the scope of impacts that are analysed and include social indicators so as to take into account non-business stakeholders.