Value Chain Glossary: Supporting Markets

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Supporting Markets

Supporting markets offer products and services in support of a range of business functions to actors throughout a value chain. Many of the services provided by supporting markets correspond to non-financial services referred to by some as business development services or BDS. These include training, consulting and accounting. However, supporting markets in USAID’s value chain framework are more varied than simple business services, and they include a broad range of financial and non-financial products and services. These products and services can be divided into three main categories:

Financial services--e.g., lending, leasing, capital investing, factoring
Cross-cutting services--e.g., business consulting, legal advice, telecommunications, advertising
Sector-specific services--e.g., irrigation equipment, veterinary services, handicraft design services

Supporting-market products and services are provided for a fee by businesses of all sizes--from independent consultants or local vendors to global firms. Value chain actors typically pay this fee because of the value the product or service provides to them and/or because it is not practical or cost-effective to provide the product or service themselves. Some common services that businesses pay for include tax and accounting services, waste management, and information and communications technology services.

Alternatively, value chain actors may acquire embedded products or services from their buyers or suppliers in the value chain. Some of the more commonly embedded products and services include equipment supply, input and raw material supply, market information, financing and technical training.

Supporting markets comprise businesses whose viability and growth are derived from demand for their products and services from client businesses. The growth and competitiveness of supporting markets is therefore limited by the growth and competitiveness of the value chains they serve. At the same time, robust supporting markets are essential for the continued growth and competitiveness of value chain actors since the products and services they provide enable value chain actors to upgrade their own products and operations. Furthermore, when relationships among supporting-market businesses are strong, value chain actors benefit from having partners who can supply information on market trends and innovations and provide access to the latest techniques and technologies that provide further upgrading opportunities.

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