5.2. Selection Resources

Approaches by other groups to value chain selection are similar to the general model promoted by USAID. Some important resources are provided below.

• USAID's pioneering Field Manual for Subsector Practitioners was published in 1991 and details a number of approaches and tools for the subsector approach that provide the foundation for USAID's value chain approach. Suggested selection criteria fall into three categories that are closely linked to the criteria recommended above: growth prospects (competitiveness), size (impact), and target groups (crosscutting issues). USAID's value chain selection process improves on, rather than replaces, this approach.

• Making Value Chains Work Better for the Poor: A Toolbook for Practitioners of Value Chain Analysis provides approaches for both value chain selection and analysis. Proposed selection criteria emphasize pro-poor issues, such as the equitable distribution of benefits and power in the value chain, and suggest the importance of competitiveness criteria. The toolbook lays out a logical step-by-step process for developing selection criteria, weighting the criteria, and ranking the value chains under consideration.

• ILO’s Guide for Value Chain Analysis and Upgrading advocates value chain selection criteria based on business performance (using Porter’s Diamond for competitiveness), so-called "ILO criteria" that relate to potential impact, and (to a lesser extent) overall economic indicators. It provides a checklist and guidance for conducting selection based on secondary data, direct observations, or stakeholder consultations. However, it does not offer an approach or tool for weighting criteria, comparing value chains under consideration, and/or making final selections.

• Selecting Pro-Poor Value Chains: A Useable Framework (2008) by Chad Hamre. The goal of this framework is to determine how pro-poor a value chain is during selection. It adopts a blend of the two definitions of pro-poor (i.e. “reduction in inequality and absolute growth”).

• A Portfolio Approach to Value Chain Development Programs. This paper demonstrates the application of the portfolio approach--a well-known strategy for managing risks in the finance industry--to value chain development. It outlines the significance of the portfolio approach for selecting value chains, conducting value chain analysis, designing interventions and monitoring overall value chain performance.

Detailed examples of value chain selection from USAID projects include:

• Zambia's PROFIT project followed the USAID value chain selection methodology to evaluate six value chains. Selection criteria included growth potential, scale/impact potential, and industry leadership. PROFIT's selection process employed bubble graphs to compare value chains within each criteria and to consolidate the analysis into a prioritized short-list.

• Bosnia's Linking Agricultural Markets to Producers (LAMP) project conducted an intensive selection process to rank eight agricultural value chains based on actual growth in recent years, volume and growth prospects of potential value chains, anticipated value increases, number of constraints facing the value chains, and analysis of potential end-markets. The process used five different analytical tools for selection.

• The Afghanistan Competitiveness Project evaluated and rated seven value chains using criteria of market size, growth potential, value addition, branding, and industry receptivity. This selection process relied heavily on Porter's Five Forces. Note that this growth-oriented project does not include impact potential in its selection criteria.