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Role of the Poor

Millenium Development Goals





Heat Maps Methodology

There are three key steps in constructing a market heat map: measuring the total number of possible poor consumers, measuring the total number of poor consumers with access to a good or service, and identifying and measuring the contributions of different actors on the supply side.

  • Step 1. Measure possible demand for a good or service within a market. There are a number of ways to approach this, since different metrics can be appropriate depending on what market is examined. As a starting point to reflect demand by the poor, one takes the total number of potential poor consumers in the market.
  • Step 2. Measure how much access possible poor consumers have to the good or service. Access can be interpreted in several different ways with reference to different issues (such as affordability or geographic proximity). For the heat maps, the measure of access used is the number of poor individuals or households now consuming or using a good or service.
  • Step 3. Provide additional information. This last step disaggregates the information in Step 2. It provides additional information on the relative shares of the different agents that together constitute total current supply.

Market heat maps could be further specified along exact population groups and along particular markets. Several measurements of the size of a poor population could be used, depending on what expenditure threshold is used to define that population. For the Growing Inclusive Markets initiative, heat maps, ‘poor people’ are defined as people earning less than US$2 a day in purchasing power parity terms (a widely used international poverty line).

From a human development perspective, it is important to focus in particular on two types of markets:

  • Markets for goods and services that could be considered to help satisfy basic human needs, thereby directly improving their welfare and underpinning their broader human capabilities (for example, water, housing or health care).
  • Markets for goods and services that could be crucial to opening opportunities for the poor to enhance their standard of living, increase their income and further expand their choices (for example, labour markets, credit markets, insurance markets or markets for information and communication technologies applications).

The paper “Exploring Challenges and Opportunities with Market Heat Maps”, together with the “Technical Note on Generating Market Heat Maps”, uses survey data from six countries in order to shed further light on one aspect of the economic lives of the poor: their access to markets. It develops a framework that could be used to map market inclusiveness, and then applies this to a number of markets that are critical to reducing poverty and achieving the Millennium Development Goals. It was commissioned for the Growing Inclusive Markets initiative ‘Working Group on Data and Statistics’, a working group led by the UNDP’s Office of Development Studies.