Regional Economic Potential Analysis: How does it work?

The method Regional Economic Potential Analysis is based on concepts like value chain analysis, learning from global buyers, gap analysis and global comparative trade analysis. It primarily draws on two methodological sources:

  • Analysis of export data in the global market context, as it has been used frequently in Brazil in the nineties
  • the ‘Learning form Global Buyers’ approach developed by IDS Sussex

Typically, the analysis is conducted in three phrases:

  1. In-depth desk research conducted at the beginning, in which statistical production, trade and investment data of a region are examined and aggregated for the specific region resulting in a number of most important growth areas;
  2. Field research in the region and in major cities of the country, narrowing down the number of potential sectors based on the buyers’ assessment of firms’ capacity and performance to meet the changing demand, and on the assessment of industry capacity to meet requirements in volume and quantity; and
  3. Comparison of current and potential global demand with current capacities and structures. The identified performances and shortcomings are then presented in a feedback workshop to local/regional stakeholders and put down in a comprehensive report.

The Regional Economic Potential Analysis is useful to

  • assist local government / donor programmes to identify the main economic potentials of a region
  • to identify current or future competitive advantages with regards to private sector development
  • support local producers to stay or become more competitive