Approaches – Poverty reduction through participation in economic growth

1.2 billion people around the world live on less than 1.25 USD a day, mainly because they lack access to regular employment and reasonable pay. The SDC is committed to effective, sustainable economic systems based on market principles, in which poor and disadvantaged sections of the population can also take part – as employees, producers, entrepreneurs or consumers.

The SDC’s focus

The SDC bases its activities on a systematic approach to market development. This approach considers markets as socioeconomic systems. It analyses and aims to take measures to correct the failings of market systems towards poor and disadvantaged sections of the population.

Social and economic marginalisation are often the result of top-heavy power structures and discrimination due to gender, ethnic origin, cultural and religious affiliation or age. To overcome these obstacles, the SDC observes the following principles in all its efforts aimed at employment and economic development:

  • Gender equality:  Women are disproportionately affected by unemployment and underemployment.  SDC programmes focus on breaking down structural and social barriers and empowering women to gain access to reasonable pay and decent work.
  • Good governance: To enable poor and disadvantaged segments of the population to take an active part in markets, transparency, predictability, effectiveness and non-discriminatory action by the state must be enhanced. The SDC is committed to enabling the poor to advocate their interests more effectively and enhancing their political impact.
  •  Young people: The SDC is committed to ways of ensuring the employability of young people. This is all the more important given the fact that children and young people account for more than half the population in most developing countries. Unemployment and underemployment affect young people especially, either because they lack sufficient qualifications, because there is a lack of job placement services, or because the labour market cannot accommodate them.
  • Sustainability and social standards: The SDC is committed to economic development that is socially and ecologically sustainable. It emphasises the observance and promotion of binding social standards for society and the economy and works to ensure compliance with core labour standards.


Economic growth is a prerequisite for sustainable development and poverty reduction in a country, but it cannot guarantee this on its own.  This is because growth can only contribute to broad-based poverty reduction and to achieving other Sustainable Development Goals if it results in more people, particularly the poor and disadvantaged, gaining access to productive, reasonably-paid and socially acceptable employment and unleashing their entrepreneurial potential.  This is essential for the equal distribution of income and the participation of broad segments of the population in the market economy.

Current challenges

One of the main aims of development efforts is to build an efficient private business sector and properly functioning markets for labour, finances, goods and services. At the same time these markets must be structured in such a way that poor and disadvantaged segments of the population can also gain access to them and benefit from these opportunities.

To this end, an in-depth understanding of market systems and the wide range of barriers that currently prevent poor people from participating in economic growth is required. Strategies must take account of the complex relationships between supply and demand such as supporting measures, legal frameworks and the specific roles of the private sector, the state and civil society. Moreover, consideration must also be given to the varied dimensions of poverty and its causes.