The Evidence Effect: What we’ve learned working with the private sector for inclusive growth

Prior Evidence Effect installments have focused on how to work with governments and nonprofits to scale what works. Of course, the private sector is another fundamental force for driving global prosperity. And for corporations and investors, there’s enormous opportunity in low- and middle-income countries’ growing markets and talent.

What’s less clear is how to partner most effectively for maximum impact: How can multinationals, local businesses, investors, governments, and catalytic donor capital work together to deliver growth, expand access to higher-income jobs, and scale market-based solutions? 

Today, a growing body of evidence offers guidance to sharpen the playbook for these partners. But more partnerships between researchers and private sector actors are needed to generate new insights and test what works. At J-PAL, we’re working to foster more partnerships between researchers and private sector implementers to help fill this evidence gap.

For those working at the intersection of development and business innovation, our message is simple: Partnership and learning are essential to maximize both profits and social impact. Together we want to create sustainable solutions that work with markets to improve people’s lives while reducing reliance on traditional aid at a time when those resources are increasingly limited. 

Three impactful strategies to get us started: What works to support business growth, better jobs, and market-based solutions

Support small and growing businesses: Small and mid-sized enterprises (SMEs) create most jobs in LMICs, but face a daunting list of barriers—lack of growth financing, difficulty finding skilled workers and managers, limited access to buyers, and so on. Multinational and domestic firms should consider those strategies that have the highest impact and business returns—for example, improved access to customers has been shown to boost SME profits, productivity, and product quality in different industries. Companies with purchasing power should use such insights to be intentional about buying from places where they actively want to create more growth and impact.

Government agencies like export promotion offices can also apply evidence to improve how they support industry development: Exporting can bring broad benefits beyond short-term growth. When local businesses in low- and middle-income countries connect to export markets, they often create more jobs, pay higher wages, and  improve product quality and management practices. 

Access to finance and capital is essential for businesses, but doesn’t always lead to transformative growth for the average small and mid-size business. A growing body of research shows that targeting high-potential entrepreneurs with more tailored finance can boost business performance and jobs. Small tweaks to microcredit programs can also improve outcomes across a large client base. Investors and lenders can use such evidence-based insights to refine their product offerings and to incorporate entrepreneur selection methods into their due diligence at low cost, improving impact and reducing risk. 

Upskill the workforce: Skills matter, but training outcomes are most successful when tied to actual employers and industry needs, and when they look beyond just technical know-how. In the United States, sectoral employment programs that focus on industries with high pay and/or rising demand for workers have led to lasting income gains and helped firms find talent. Globally, boosting soft skills like communication and teamwork is increasingly proven to make a real difference in lifting the earnings of workers and entrepreneurs by lifting productivity. Business stands to benefit from participating in such programs to access a pool of workforce-ready talent, helping support growth.

Make markets work for people and businesses: Scaling up market-driven solutions has the potential to bring home immense benefits, including helping solve long-standing development challenges—when designed well. Discovering how these programs affect not just the people directly involved, but also the broader community, can help shape more appropriate design choices and avoid unintended harm.

Policymakers and implementers should pilot and test novel market interventions before scaling. In India, emissions markets now improving air quality for 15 million people began with a rigorously tested pilot, showing how evidence-informed market tools can deliver large-scale improvements to people’s lives.

Market tools work best when they reduce risk, build trust, and create incentives for investment across entire supply chains. In agriculture, for example, research is revealing both the benefits and tradeoffs of improving farmers’ access to domestic and international markets, helping decision-makers understand not just who benefits and how these benefits are distributed, but how these programs affect prices, production, and communities. 

How can we create the right enablers for evidence-informed private sector impact?

J-PAL is investing in partnerships between researchers and private sector implementers to co-generate new insights and make evidence use more routine in private sector decision-making for impact:

• Our work on private sector engagement helps companies to access J-PAL’s evidence and research in support of their social and environmental goals.
• The UM6P-J-PAL Agricultural Lab for Africa (UJALA) is advancing solutions for small-scale farming and food security on the continent in partnership with OCP Africa, a leading fertilizer company.
• We are partnering with businesses from across industries to meet their impact aims, from decarbonizing aviation to ride-hailing, to improving factory working conditions in the fashion supply chain.

Supporting evidence-informed policy that contributes to long-term growth is also critical. Government-research partnerships helped inform policy decisions like India’s market-based industrial pollution regulation, and are identifying tools to improve public procurement, court systems, and taxation.

Of course, rigorous research on programs, policies, and investments is just one piece of the puzzle. Global trade trends, macroeconomic stability, and social policies to address extreme inequality all shape how much the private sector can contribute to inclusive growth. But evidence on growth and market-shaping policies plays a vital complementary role in these broader conversations. We welcome continued dialogue and collaboration to help keep private sector solutions both innovative and grounded in what delivers real impact.