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Strategy for Private-Sector Development in Developing Countries: A Case Study of Southeast Asia

Author Lim Soyoung, Jung Sunin, Na Hyeseon, Lee Sangjun Date 2016.12.27 Page
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Currently, in the sustainable development of developing countries, the importance of the role of the private sector is being increasingly emphasized. Recognizing this growing consensus on the importance of the private sector in international development, donor countries are introducing diverse measures to increase the effectiveness of the development efforts and participation of the private sector in developing countries. There is thus increasing support for private sector development, including the development of legal and physical infrastructure and improvement of business environments, in the hopes of creating jobs for and increasing the incomes of locals.


The literature on development cooperation defines private sector development (PSD) in diverse ways, depending on the given context and perspective. The 2016 report of the advisory group on investment and development of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) provides a much more specific definition of PSD than has been used in the past. According to the report, PSD is “development cooperation that addresses policies and institutions, market functioning, and enterprise resources in order to improve the investment climate and the productivity capacity of the local private sector, particularly of Small- and Medium-Sized Enterprises (SMEs), in developing countries.” 


Despite the growing importance of PSD and effective cooperation with the private sector in international development, the Korean government and NGOs conspicuously lack a coherent and systematic strategy for PSD in developing countries. In this study, therefore, we attempt to address this issue by developing and proposing a national-level PSD strategy, focusing on Southeast Asian countries. As Southeast Asia is now emerging as a key economic and geopolitical player on the world stage, it is particularly important for the Korean government to strengthen Korea’s ties with the private sectors of these countries. Currently, the South Korean government is engaged in development cooperation with six countries in the region?Indonesia, the Philippines, Vietnam, Cambodia, Laos, and Myanmar?all of which are experiencing explosive economic growth and offer significant potential for cooperation with Korea, but have struggling private sectors