Private Sector and Development Policy: Advantages and Problems

Abstract

In the past years, the private sector has been incorporated into international development policy, a policy field traditionally dominated by the states. Due to shrinking budgets and insufficient results, the objective is to fill the gap with private contributions. However, the private sector is very heterogeneous: incentives, objectives, financial volumes and methods can differ considerably. Therefore, the results and the effectiveness of the private sector’s contribution might differ as well. In addition, the incorporation of the private sector is a controversially discussed topic as it is associated with various challenges. On the one hand the private sector can act more flexible and less bureaucratic, also it can better encourage innovation and know-how. On the other hand, problems arise related to an insufficient regulation system, mainly commercial or image interest and democratic control. More research is necessary.