Private sector development: Policies, practices and problems

Abstract

Private Sector Development (PSD) has become a central concern of most donors' development cooperation efforts during the last decade. This paper is a critical review of policies in the area. Donors' work with concepts of PSD which are highly abstract, treat developing countries' private sectors as tabula rasa, and focus mainly on macro level preconditions. In practice, however, concrete PSD policies are mostly micro level ones. The paper argues that they are shaped mostly by the nature and interests of private sectors in donor country themselves, incorporate a high proportion of tied aid, and fail basic tests of coherence.