This expert post comes from USAID/MD office Enterprise Development Advisor Jason Wolfe.
Those of us interested in the economic welfare and security of young people have a bewildering array of interventions and approaches to consider. While each has its own advocates and critics, tremendous amounts of confusion seem to swirl around one in particular: “livelihoods.” For those that know it very well (and I don’t claim to be one of them), it unleashes a whole new way of understanding the people we care about and putting their needs and perspectives at the center of our work. For the rest of us, it’s yet another ambiguous and empty piece of development jargon. I’ve come to better appreciate its advantages and disadvantages, particularly with respect to another approach that I do know well: the value chain approach.
The livelihoods framework comes out of a (mainly European) academic community that was initially concerned with environmental impacts, and until recently it was one of DFID's cornerstone approaches. The livelihoods framework is centered on the individual household and seeks to understand the various capabilities available to the household (defined as human, social, financial, natural and physical capital) to form a means of living (known as a livelihood strategy). In general, the livelihoods framework is very helpful in understanding the context, motivations, and resources of target beneficiaries (especially those that are very vulnerable). Beyond this however, the livelihoods framework is extremely descriptive, static, and reactive. Basically, you can use the livelihoods framework to understand the people you are trying to help but it doesn’t seem helpful for how to help them.
The value chain approach by contrast recognizes households and enterprises as part of a market system or “value chain". It is, first and foremost, the performance of this entire system that determines whether individuals within it can benefit and grow from their business activities. Accordingly, we look at the "systemic factors" that affect this performance: end markets for products, enabling environment issues, linkages between businesses, support services (such as finance, legal support, or agricultural extension services), needs for upgrading, and the effect of power imbalances and trust within the system. Ignoring these systemic factors is likely to undermine any efforts to improve the performance of any individual business. I consider this approach to be prescriptive, dynamic, proactive, and actionable. In other words, by understanding the economic system within which people are operating, you are better able to pursue both overall growth within that system and improved benefits for individual firms. Whether or not this growth improves the wellbeing of children and youth in the short and/or long term remains to be seen – although I have my suspicions that it does. Nonetheless, the systemic viewpoint taken by the value chain framework allows us to move from understanding to action.
The big disconnect between these frameworks is that the livelihoods framework does not really provide the capacity to understand larger systemic issues. It is a snapshot of the circumstances and access to resources of an individual. Further, the livelihoods framework fails to orient an implementer towards growth strategies. Rather it tends to identify assets that have been lost and tries to replace them – potentially putting households back in the same position of vulnerability from which they originally lost those assets (drought, war and economic instability being key factors here). Unfortunately, I personally feel that implementers wedded to this livelihoods mindset can easily get stuck in defensive, protective strategies that offer little long-term potential for poverty reduction or economic growth. Nonetheless, the framework seems extremely useful in understanding the complex situation, risks, and resources at a household level – particularly social factors that more economic-minded practitioners may not immediately comprehend. Social relationships, obligations, and taboos can powerfully influence a household’s behavior, perception of risk, expectations of benefits, and consumption patterns – especially among the most vulnerable whose social capital may be the most important and tangible assets they possess.
So, the question is, how can we reconcile these two seemingly valuable but often misunderstood and maligned development frameworks?
As I said above, I think the livelihoods framework is indeed very helpful for painting a fuller and more accurate picture of vulnerable households. This perspective then directly relates to the "upgrading" factor in the value chain approach. “Upgrading” refers to the set of improvements, behavior changes, or new investments that individual businesses need to make in order to reap more benefits for themselves and contribute to improved value chain performance. The livelihoods perspective can help us to understand the incentives and conditions under which target households will actually adopt necessary upgrading, particularly for very vulnerable households. Assuming these economic advancements yield benefits to youth and children – an admittedly unproven assumption – could we use the livelihoods framework to better inform our intervention strategies, activity designs, and monitoring and evaluation efforts?
For those of you that have implemented something like this or have opinions on how to reconcile these two frameworks, I hope you will provide feedback in the comments section.
Livelihood vs. VCA
To add on in the discussion,
Value chain and livelihood, is essential for sustainable poverty alleviation. If VCA approach is taken into the context of value chain development. The approaches is holistic – which would also include social barriers that hinders competitiveness in the market
A former colleague told me that previously they designed livelihood project as food security without looking at its viability (market) and that is was unsustainable. As echoed by field staff, not just a “pantawid gutom” (remove hunger) – removing the traditional notion of income generating activities and traditional concept of participatory livelihood analysis. It should be an informed decision making processes where options are analysis, identified and prioritized prior to identifying a livelihood intervention.
Design intervention: It calls for a project design that takes into account a longer social preparation phase that capacitate individuals into a deeper - market approach in their livelihood options. I remembered asking livelihood proposals to be back on drawing board because the "market" and potential overproduction was not considered. The question thrown back on me was, is there an available information on current data on production, gaps in the local, regional, national and global market? On the economic development planning side, would the livelihood promoted is consistent to the regional growth corridors – considering skills, resources, etc.
Mindset – how can one be an entrepreneur? It is a realization that consistent with the value chain concept – households will just be good as producers, some processors and others are skilled in market linkages.
The challenge in a value chain, (as our field officers gave their feedback) is that manufacturers would want a factory based production centers where it may provide employment, it actually cost more than the community-based manufacturing (cost of travel vis-à-vis compensation ). The latter provide employment to children and youth and actually allow them to go to school, at the same time helping their family augment their income. Historically, it is also the source of artisans where skills is in high demand and adequately compensated.
Thanks to Monika, Richard, and Jan for...
Thanks to Monika, Richard, and Jan for your insightful comments – and big apologies for my long absence from this intriguing discussion. You've all given me a lot to think about.
The paramount, and multifaceted, concern for the welfare of children and youth seems to have generated a pervasive allergy for engaging with the private sector. Why is this? On one hand, I think it's rooted in some very real and negative experience each of us have witnessed with private companies bent on maximizing short-term gains at the expense of poor households – the nefarious multinational, the evil commodity trader, and the usurious loan shark. But I wonder if the larger issue is that we lack a common language, understanding, and process for how to productively engage with the folks who can provide the jobs, markets, goods, and services our beneficiaries need in a more efficient and effective way than we can. Monika offers us some great ideas, examples, and directions for changing our view of the private sector – and I'm very curious what everyone else thinks. What are the opportunities? What are the threats?
As Richard points out, I've come to look at the livelihoods framework and value chain approach not as competing strategies but as different views of the world. They help to highlight varying factors and make explicit different assumptions that are considered important in slightly differing contexts. Neither is right nor wrong, but they can easily lead us in different, and sometimes, competing directions if we accept them as dogma and miss any nuance that they don't do a good job of articulating. For livelihoods, I think the potential blind spot is an orientation towards growth and engagement with other systems outside the household, such as market systems. For value chains, I think it's an understanding of less tangible assets, such as social capital, and household risk management. Neither approach omits these important factors, but each does a poor job of leading us to them in an explicit fashion. Mike Albu's paper, which I'm very thankful to Jan for introducing, raises some interesting relationships between these two approaches and highlights another factor (learning and innovation) that is absolutely critical for growth, sustainability, and household resiliency. This is fascinating stuff from my perspective, but how helpful is it for all of you on the front lines of trying to make this work in the field?
All this talk of approaches and paradigms is interesting on a certain level, but at some point we have to get down to brass tacks and actually figure out what interventions we're going to implement. I'm sure this is where many of you are most keenly interested, but I've consciously shied away from this discussion. I don't think it's helpful to even begin to talk about what we're going to do until we can all agree on why we're doing it and what we hope to achieve. Training for training's sake can be wildly successful if all we're doing is counting how many kids we push through it. But what if we instead agree we're actually interested in getting them into gainful employment? Or what if we're more interested in raising their incomes or assets? How does that change how we craft our interventions, monitor our progress, and define our ultimate success or failure?
How does any of this resonate with your very real challenges and experiences? Pointless musings from yet another donor stuck in his ivory tower? Where do we need to go from here?
-Jason
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For those in the Washington, DC area following this thread, I hope you will join my colleague Radha Rajkotia of the IRC and me at an upcoming event being hosted by the Washington Network for Children in Conflict. To be held at the Search for Common Ground offices on February 13, 2009 from 10:00 - 12:00, the event will explore this topic and how the livelihoods framework and the value chain approach can be employed to improve the well-being of youth in conflict settings. For anyone unable to make the event, we will try to post a summary here afterward.
Click here for more information.
LIVELIHOOD VS VALUE CHAIN DEVELOPMENT
HELLO,The livelihood methodology is invaluable in times like this. It stresses careful analysis of local markets, which may be the only ones to which many microenterprises will have access for some time, as well as the crucial ‘non-market transactions’ through which vulnerable households and communities obtain child care, food, and shelter. With capital flows cut off, export markets drying up, and cash in short supply, the poor will need efficient barter systems, local currencies, and value-adding enterprise microenterprise networks and similar interventions that can keep production and consumption going, albeit slowly. When the global market begins to recover, balancing livelihood risk and value chain growth will continue to be a challenge for practitioners.
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NEETU
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livelihoods vs. value chain frameworks
Jason,
I think the distinction you draw between the two is brilliant. What I love about it is that it reveals the underlying discourse, or way of seeing the issue of (youth) employment and economic growth. As I thought about it, I came up with at least three additional frameworks: I call these 1)just educate your population and econ growth will follow and 2)training is a private sector responsibility, companies know what skills they need, let them tell the educators, and 3) use microcredit to create livelihoods and the rest will follow. It turns out of course, that none of these can fully contain what is actually going on in countries where workforce development works well. We know by now that education by itself is no guarantee of econ growth - it does guarantee brain drain... In my opinion, the ability of a workforce to add value to a product or service determines is critical for econ growth. The private sector is a critical partner and much more needs to be done in poor countries to organize them into a voice that can speak with educators...in many countries ministers of commerce, ed and labor don't meet or ever talk! In Sweden industry groups advise the education system and they do it in a wonderful, hands off way that still has their needs met. And we know that microcredit helps get kids in school, but too often it does not lead to small business or econ growth, so that these children migrate out and send home remittances ....a net loss for the country, no? What do you think would be possible if we had the opportunity to engage country leaders in the private and public sectors in a conversation about these frameworks so they could "own" what each makes available. I think we need them all, what do you think?...Monika Aring
Value Chains and Livelihoods
Sustainable livelihoods and value chain approaches are not competing development strategies, but two sides of the same coin with a single goal: poverty alleviation. Because economic conditions vary widely across space and quickly across time—witness the precipitous fall of international trade in just the last month—the two approaches should be seen as complementary. In most places, their use should be sequential—even iterative in response to major swings in the level of economic activity.
Moving people permanently out of poverty ultimately requires that a larger share of household assets be invested in profitable enterprises. Value chain theory and practice is well suited to finding business opportunities for the poor when global markets are flourishing and consumers spend freely. When the world is in recession, however, interventions to help target groups hedge against adversity are essential.
The livelihood methodology is invaluable in times like this. It stresses careful analysis of local markets, which may be the only ones to which many microenterprises will have access for some time, as well as the crucial ‘non-market transactions’ through which vulnerable households and communities obtain child care, food, and shelter. With capital flows cut off, export markets drying up, and cash in short supply, the poor will need efficient barter systems, local currencies, and value-adding enterprise microenterprise networks and similar interventions that can keep production and consumption going, albeit slowly. When the global market begins to recover, balancing livelihood risk and value chain growth will continue to be a challenge for practitioners.
C. Richard Hatch
Enterprise development consultant
Potomac, Maryland
putting markets into the sustainable livelihoods frameworks
Jason,
When I was looking for ways to integrate both frameworks, I came upon an interesting paper written by Mike Albu of Practical Action. See http://www.livelihoods.org/lessons/project_summaries/enterprise1_projsum...
Best regards,
Jan Maes
Facilitator, The SEEP Network Poverty Outreach Working Group