A striking aspect in recent development discourse is the surge in references to “promoting the role of”, “engaging” or “partnering” with the private sector for development.

Commitments made at the Busan High Level Forum on Aid Effectiveness, by the G8 and in the EU’s recent Agenda for Change, range from involving the private sector in designing and implementing development policy, to “leveraging” private sector activity and finance, and improving the environment for businesses in developing countries.

Although there are clear overlaps between the domestic and international private sectors, forms of engagement operate through different channels, raising different questions and issues. The implications of involving the international private sector to achieve development goals are less clear.

There is also private sector demand for engagement with “the development sector” and the competition European firms face in Africa, from China, India and Brazil and elsewhere, also has a role.

Key purpose of ECDPM Study

While the focus on “private sector development” is nothing new, the increased focus from donors on engaging the “private sector for development” is more recent. Some of the issues, regarding the real outcome and impact of public-private cooperation, might be addressed by a coherent and comprehensive set of standards for impact measurements.

This paper gives an overview of recent commitments relating to the private sector and the questions these raise, going beyond the rhetoric to thinking about the practical implications of such engagement.

Key findings of ECDPM

• Ultimately, the power of involving the private sector will lie in identifying where the interests of all stakeholders are genuinely aligned, and ensuring informed, wider stakeholder engagement within specific countries and sectors.

• The increasing rhetoric on engaging the private sector for development implies a very broad agenda. While it is perhaps healthy to have some honesty about the desire to benefit developed country firms, development commitments imply that the implications must be studied in more depth.

• We may also need to understand the limits of what either party can actually do. Ultimately, private sector operators and development policy makers come at “development” from quite different angles.

Read Discussion Paper 131

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