Agricultural-based economic development

© GIZ/Martin Godau

A strong agricultural economy brings social progress by increasing productivity, employment and income.  

 

Agriculture is the main driver of development in most rural areas. Demand for staple foods, agricultural commodities and - increasingly - processed food is growing in developing countries. To meet these needs, the agricultural and food sectors must be modernized.

Sustainable economic development brings social progress through the creation of jobs and income, as well as the integration of poverty groups, young people and the unemployed. Markets require public support and regulation. The economy is organized along value chains, because the point of reference for all economic activity is the products and the markets on which they are sold.

Value chains (WSK) are systems in which companies cooperate to produce products in demand and serve markets. Access to the market for economically weak micro-enterprises is through their integration into WSK.

The aim is to establish economic structures and increase value creation in the partner countries. This development must be ecologically sustainable and socially equitable: Everyone should benefit from growth, resources must be used sustainably and local ecosystems must be protected.

On behalf of the German Federal government, GIZ is working with all stakeholders to develop strategies for agrarian-based economic development. The GIZ uses the ESC approach and is guided by the principles of the Sustainable Development Goals (SDGs). An important criterion is the economic viability of the solutions. GIZ uses the freely accessible "ValueLinks 2.0" method to ensure economic viability. This is a practical approach to improving value chains.

Agricultural-based economic development is to be understood as bridging the gap between market-oriented development and numerous development policy issues and goals, above all poverty reduction and gender justice, adaptation to climate change and ecological transformation of the economy, and the formation of structures for public action. The formats for agricultural-based economic development are correspondingly diverse: from the comprehensive promotion of certain sectors of the agricultural economy to measures in specific areas, such as cooperation among farmers, contract farming, agricultural financing or laws and standards. Every approach and every measure must take into account the overall framework and all parts of the value chain.

GIZ advises its partners on implementing measures that strengthen the competitive advantages of a region and create good framework conditions for the private sector. In this way, local administrations become more competitive and regional differences are balanced out.

GIZ also supports its partners in generally creating better conditions for development: Local administrations receive support in converting to modern procedures, and legal and regulatory hurdles are removed so that the private sector can develop.