Friday, July 01, 2005
Promoting Private Sector Development in the Pacific. A Strategy for Asian Development Bank
By: The Enterprise Research Institute
For: The Asian Development Bank Under: RETA 6037: Private Sector Development Strategy For The Pacific, 2003
The Asian Development Bank (ADB,) as part of its support to the countries of the Pacific is articulating and developing a strategy for the private sector in the region. Support for the private sector is an integral part of the Poverty Reduction Strategy recently adopted by ADB. Recognizing the link between private sector performance and poverty reduction provides motivation for a coherent approach toward ADB’s assistance to the private sector in the region. This report provides a first step by proposing a strategic approach toward the private sector in the Pacific Islands based on selectivity of major impediments to growth of the private sector. It draws on four country private sector assessments undertaken by the authors and on several other country assessments undertaken by others. Some recommendations in the report may be controversial as they come from findings that have not been widely identified or recognized in past work but they are based on the importance of providing the appropriate operating environment to stimulate private sector growth. This document outlines strategies for the countries themselves, the donor community, and ADB that are designed to improve the business environment in the region. It is based on the premise of the regional PSA - that without the development of the private sector, reduction in poverty cannot be achieved. While this is an uncontroversial standpoint in many places, it is less so in the Pacific region, which has traditionally had a strong collectivist mindset. A premise of this document, however, is that the collectivist nature of Pacific society is not necessarily inimical to private sector development. Indeed, visits to the countries in the Pacific region revealed anecdotal evidence of community based entrepreneurship that supports observations of others who have documented examples of entrepreneurial community activity in several countries in the region. Entrepreneurship at both the community and individual level should not be discounted. However, incentives that exist in many countries are not supportive of entrepreneurial endeavor and it is not surprising, therefore, that private sector activity is limited.
From the donor perspective, actions to support private sector activity have taken place at the specific project level, without having a more general private sector development framework within which to assess priorities. This report argues that while detailed interventions might be necessary at a micro level, unless they are based on an overall assessment of the problems facing the private sector, they are bound to be less effective than they otherwise could be. The main theme of the recommendations is that if policies to assist the private sector to grow are to be effective, a country strategy must center on the measures necessary to improve the environment for doing business. It must start from a “top down” approach to private sector development that begins with an assessment of the problems that leads to deciding on priorities and designing solutions. Only then will detailed “bottom up” interventions have the potential to realize lasting benefits.
For: The Asian Development Bank Under: RETA 6037: Private Sector Development Strategy For The Pacific, 2003
The Asian Development Bank (ADB,) as part of its support to the countries of the Pacific is articulating and developing a strategy for the private sector in the region. Support for the private sector is an integral part of the Poverty Reduction Strategy recently adopted by ADB. Recognizing the link between private sector performance and poverty reduction provides motivation for a coherent approach toward ADB’s assistance to the private sector in the region. This report provides a first step by proposing a strategic approach toward the private sector in the Pacific Islands based on selectivity of major impediments to growth of the private sector. It draws on four country private sector assessments undertaken by the authors and on several other country assessments undertaken by others. Some recommendations in the report may be controversial as they come from findings that have not been widely identified or recognized in past work but they are based on the importance of providing the appropriate operating environment to stimulate private sector growth. This document outlines strategies for the countries themselves, the donor community, and ADB that are designed to improve the business environment in the region. It is based on the premise of the regional PSA - that without the development of the private sector, reduction in poverty cannot be achieved. While this is an uncontroversial standpoint in many places, it is less so in the Pacific region, which has traditionally had a strong collectivist mindset. A premise of this document, however, is that the collectivist nature of Pacific society is not necessarily inimical to private sector development. Indeed, visits to the countries in the Pacific region revealed anecdotal evidence of community based entrepreneurship that supports observations of others who have documented examples of entrepreneurial community activity in several countries in the region. Entrepreneurship at both the community and individual level should not be discounted. However, incentives that exist in many countries are not supportive of entrepreneurial endeavor and it is not surprising, therefore, that private sector activity is limited.
From the donor perspective, actions to support private sector activity have taken place at the specific project level, without having a more general private sector development framework within which to assess priorities. This report argues that while detailed interventions might be necessary at a micro level, unless they are based on an overall assessment of the problems facing the private sector, they are bound to be less effective than they otherwise could be. The main theme of the recommendations is that if policies to assist the private sector to grow are to be effective, a country strategy must center on the measures necessary to improve the environment for doing business. It must start from a “top down” approach to private sector development that begins with an assessment of the problems that leads to deciding on priorities and designing solutions. Only then will detailed “bottom up” interventions have the potential to realize lasting benefits.