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| Participatory Appraisal of Competitive Advantage - Test of the Methodology in Serbia, USAID AMAP, ACDI VOCA 2005 |
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| Country(ies) | Serbia |
| Implementing agency(ies) | ACDI/VOCA, Mesopartner |
| Funding agency(ies) | USAID |
| Date completed | March 2005 |
| Target Group(s) | Micro, Small |
| Issues/challenges | Local economic development |
| Contact person(s) | Mr. Olaf Kula |
| Web site | http://www.microLINKS.org |
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Description
In late 2003 and early 2004, ACDI/VOCA and Mesopartner through USAID funding tested a local economic development (LED) approach called Participatory Appraisal for Competitive Advantage (PACA) in central Serbia. PACA¿s main purpose is to bring public and private leaders together to strategically plan for economic development in a specific locality. ACDI/VOCA and its partners under AMAP BDS tested PACA to determine its usefulness in developing a plan for economic development that includes micro and small enterprises (MSE¿s).
While reporting on an experiment with PACA in central Serbia, this paper also attempts to provide answers to the following set of questions important to AMAP research:
1. What approaches to local economic development (LED) successfully integrate micro and small enterprises (MSE) into productive markets?
2. Can the methodology used in the central Serbia experiment stimulate LED and strengthen the role of MSE¿s in markets?
3. What modifications would be needed for PACA to work better for small firms?
4. How can LED and BDS market assessment be combined to maximize benefits for small firms?
5. What additional research and experimentation is needed to improve the tool set now available for integrating MSE's into local economic development strategies?
The report is divided into five sections: 1) the background and rationale for the PACA test, 2) the results of the assessment in Serbia, 3) an explanation of why PACA was used and how successful it was, 4) analysis of the tools¿ utility and limitations, and 5) recommendations and conclusions.
Summary of results
While the results of this exercise were mixed, the evaluation yielded useful insights into when and how participatory LED approaches are appropriate and the preconditions critical to their success. While PACA has strengths, including focusing on clear results, bringing private and public stakeholders together, and mobilizing local actors; there are two areas where important questions arise. The first concerns the use and limitations of the tool in the context of local markets. This concern is external to the PACA tool itself but important to project managers interested in employing LED. To illustrate, in Serbia where the environment is characterized by weak markets and dominated by public sector players, the selection process did not result in an action plan that could be tied to making markets more robust, productive or vibrant. The second area of concern relates to the utility of the set of tools to identify economic opportunities for MSE¿s. To be successful at identifying MSE opportunities, community leaders must be involved in the process from the beginning, which the PACA manual does not suggest strongly.
The experience with PACA in Serbia highlighted a number of lessons regarding the conditions under which PACA is appropriate and lessons concerning its effectiveness at assessing opportunities for small and very small firms to participate in productive markets.
In looking at the effectiveness of PACA for ensuring that small and very small firms contribute to and benefit from participation in productive markets, the evaluation found that in order to ensure that MSEs receive the attention they deserve, the following pre-conditions must be met:
- The sponsor, champions, and team members must all agree on the importance of integrating small firms into local economic development efforts.
- Participant stakeholders must have representation from the small-scale entrepreneurs targeted for the project.
- Other assessment tools, subsector, cluster or value chain analysis should be conducted before the PACA exercise in order to identify opportunities for targeted small and very small firms that enable them to either reduce their operating costs and/or increase their revenues. Findings and analysis of this market assessment exercise must be made available to champions and sponsors before beginning the PACA process.
These pre-conditions make it more likely that PACA¿s positive qualities¿speed, involvement, motivation, enthusiasm¿will translate into action, providing donors and practitioners with a useful point of entry. PACA can be useful in the startup phases of development programs, and to generate participation. However, it¿s a motivational approach to identifying opportunities and building a community of stakeholders committed to change; it is not a market assessment tool. These points also highlight the critical weakness of PACA which is that it is not a easily adaptable set of tools. It requires pre-intervention assessment and analysis by highly skilled consultants.
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