Making policies work


Discussion Papers (series)

Beyond aid in private sector engagement

Discussion Paper 187

May 2016

Große-Puppendahl, S., Byiers, B., Bilal, S. 2016. Beyond aid in private sector engagement: A mapping of the opportunities and challenges of development and commercially-oriented public support to private sector engagement. (Discussion Paper 187). Maastricht: ECDPM.

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A mapping of the opportunities and challenges of development and commercially-oriented public support to private sector engagement

Developing countries increasingly promote inwards investment and global value-chain integration as strategies to create more and better jobs. At the ‘other end’ of the value chain, partner countries increasingly aim to work with businesses to achieve both commercial and development objectives.  Linked to this, the 2030 Agenda for Sustainable Development calls for greater policy coherence towards sustainable development, so that the pursuit of economic interests should not be delinked from sustainability and development objectives.

This paper maps out the key instruments used by donor country governments to engage the private sector, both for development and for commercial purposes. Categorising different types of support, including both financial and non-financial means of working with firms, it looks at the potential opportunities and challenges for using these for development, and the potential synergies between developmental and commercial approaches. By looking at the overlaps in these approaches and some specific donor-country examples, the paper aims to outline where further policy dialogue and research might be useful.

Key messages

  • A mapping of public policy instruments to promote private sector trade and investment outside the EU for both development and commercial purposes identifies some of the key opportunities, challenges and synergies for using these instruments in a coherent way to promote sustainable development outcomes.
  • Development and commercially-oriented public instruments to engage the private sector abroad take similar forms that can be roughly categorised as 1) matchmaking services, 2) financial support and 3) technical support, with an increasing use of loans, equity investments and guarantees – rather than grants or soft loans only.
  • The similarities between the objectives and means of instruments point to the potential opportunity for synergies and greater coherence between public instruments with commercially-oriented and development-related objectives, and activities that are more inclusive and to the benefit of the poor.
  • Dedicated efforts are needed for 1) a more coherent application of sustainability criteria to the instruments, 2) better evaluation and learning opportunities of existing instruments, and 4) increasing transparency through better access to data and achieved impact and results.

Read Discussion Paper 187

Download (PDF, 1.3MB)

Photo: Unilever Côte d’Ivoire. Courtesy: Abdallahh/Flickr/CC

In addition to structural support by ECDPM’s institutional partners Austria, Belgium, Denmark, Finland, Ireland, Luxembourg, The Netherlands, Portugal, Sweden, and Switzerland, this publication also benefits from funding from the Department for International Development (DFID), United Kingdom.

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Economic recovery and transformationDiscussion Papers (series)Private sector