Private sector development

Private Sector Development (PSD) is a term in the international development industry to refer to a range of strategies for promoting economic growth and reducing poverty in developing countries by building private enterprises. This could be through working with firms directly, with membership organisations to represent them, or through a range of areas of policy and regulation to promote functioning, competitive markets.

Introduction

Supporters argue that PSD is an important part of poverty reduction. Whether as workers, subsistence farmers or entrepreneurs, most poor people already participate in markets. Strengthening these markets in ways that secure higher incomes for the poor is therefore seen by PSD advocates as a fair and efficient way to fight poverty. Earning a decent income in the private sector, it is argued, is also more dignifying than relying on hand-outs.

As with all development interventions, PSD programmes are under pressure to measure and report their achievements, monitoring and evaluating their work in ways that are both credible and cost-effective. One source of further information about methodologies for measuring the results of PSD, including the approaches currently used by different donors, is the Donor Committee for Enterprise Development.

Private sector

The private sector is the part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the State (areas of the economy controlled by the state being referred to as the public sector).

Employment

The private sector employs most of the workforce in some countries. In private sector activities are guided by the motive to earn money.

Regulation

The private sector is legally regulated by the state. Businesses within one country are required to comply with the laws in that country.

In some cases, usually involving multinational businesses that can pick and choose their suppliers and locations based on their perception of the regulatory environment, these regulations have resulted in uneven practices within one company. For example, workers in one country may benefit from strong labour unions, while workers in another country have very weak laws supporting labour unions, even though they work for the same employer. In some cases, industries and individual businesses have chosen to self-regulate by applying higher standards for dealing with their workers, customers, or the environment than the minimum that is legally required of them.

Development

Development or developing may refer to:

Land use

Science and technology