Under What Conditions Should Donors Promote Consulting Services in Developing Countries?
Pleva, Paul M.
2006
- Submitted in partial fulfillment of the degree Master of Arts in Law and Diplomacy at the Fletcher School of Law and Diplomacy. Abstract: This paper examines how the provision of consulting services to businesses in developing countries can be improved by setting out a framework for assessing when it is well justified for donors to intervene in the consulting market. Much donor thinking on consulting ... read moreservices has focused on how to deliver the services effectively, but less thought has addressed the conditions for intervention. This paper attempts to fill that gap and offer direction for future research. The paper first describes the donor history of consulting services and tells a story of intervention evolving from direct provision to market intervention and most recently fragmenting along multiple theoretical faults. In response to the volatile conceptual history, the paper lays out a four part framework for assessing whether intervention is well justified under given circumstances. The first piece of the framework requires showing that the benefits of consulting services are greater than the costs in the society. Second, potential market failures are examined to help explain low levels of service provision in situations where benefits outweigh costs. Third, equity rationales for intervention are considered. Fourth, even when potential benefits and a demonstrated market failure exist, donors must have a cost effective method of intervention; the paper provides a description of how to determine if the intervention is cost effective. The framework offers intervention options corresponding to potential problems discovered in steps one and two of the framework. The paper reaches four conclusions. First, empirical research is required to determine (1) the degree to which business cash flows change due to consulting assistance, (2) the costs of consulting services, (3) the commonness or diversity of knowledge and advice demanded by businesses, and (4) the factors contributing to monopoly. Second, information failure deserves careful attention as a determinant of need for strategy consulting interventions. Third, promoting guarantee schemes is an under explored option. Finally, there may be many circumstances which don't call for intervention.read less
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- tq57p352k
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- tufts:UA015.012.DO.00130
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