Improving market access

Productivity gains can mean little without expanded access to markets. Market
structures in many rural regions of the developing world are very weak, so the allocative
efficiencies that markets achieve in fast-growing sectors of their economies do not
materialise. Instead, undeveloped market demand for outputs discourages producers from
raising production, while the consequent failures of incomes to rise in rural areas deters
private traders and rural enterprises from entering and doing business. A vicious cycle. In
the absence of functioning markets, rural areas remain trapped in a subsistence economy
in which neither the narrow agricultural production sector nor the wider rural economy
(both of which generate off-farm employment opportunities) can grow.
In the past many governments tried to address agricultural market failures in rural
areas by creating state-managed organisations, such as marketing boards. Most of these
interventions proved to be costly failures, often enabling widespread corruption to take
hold to rural economies, and are becoming less and less common. The problems associated
with weak markets remain, however, and new efforts are required if the agricultural sector
is to spark sustained and rapid growth in poor countries. These efforts should focus on
creating effective markets through improving the enabling conditions for wider private
sector participation. Removing restrictions on the movement, sale and purchase of
agricultural products is one example where changes are needed.
Insecure property rights, weak financial services and poor infrastructure are three
of the most common barriers to more efficient rural markets, often to the notable
disadvantage of women. There is mounting evidence for attention to all three areas to
transform stagnating rural areas.