Private Sector Development:The key to economic growth

Purpose and structure of this paper

Private sector development currently enjoys great popularity. In their electoral programmes last year, most Dutch political parties identified economic growth and the private sector as the main pillars of development cooperation. The World Bank’s Doing Business Report 2007 describes government actions to support the private sector. And all donors embrace private sector development in their policies.

The Dutch government aims to support developing countries in creating conditions for sustainable economic growth. The private sector plays an important role in these countries and the Sustainable Economic Development Department (DDE) has developed a strategy to promote its development so as to contribute to economic growth and poverty reduction. The strategy was inspired by the OECD-DAC peer review report, the AIV report and several programme evaluations. The strategy addresses the five themes identified by the Department as well as cross-cutting subthemes such as Corporate Social Responsibility and Partnerships. More details about the themes can be found in the five theme-specific working papers (DDE, April 2007).

The paper is structured as follows:

• Chapter 2 explains why private sector development is crucial to economic growth and poverty reduction.
• Chapter 3 gives an overview of international policy trends in this field.
• Chapter 4 describes DDE’s strategic choices with regard to private sector development and policy implications.