Private Sector Development in Latin America, the Post-Communist Countries of Europe and Asia, the Middle East and North Africa

After a long period in which state-led development was the dominant economic paradigm, since the 1980s private sector development has been the focus for economic policy makers. It is probably no coincidence that economic growth, stagnant for a few decades in much of the developing world, took off in the 1990s after this policy shift, and has generally remained high (in spite of a wave of crises and recessions in the late 1990s and early 2000s).

According to the authors, privatization policy makers in these countries need to pay particular attention to improvements in competition and the institutional environment, as the region suffers particular deficits in these areas, particularly with respect to competition. In recent years the focus increased on improvements in the business environment, which are necessary to stimulate entrepreneurship and encouragement movement from the infromal economy into the formal sector. Latin America and the MENA region has made significant improvement, the post communist countries have been leaders. Although the MENA region performs very well with respect to the protection of property rights, it needs improvement in the financial sector. Although rich in savings, it performs very poorly in these countries with respect to the provision of credit to the private sector (particularly small and medium-sized enterprises), largely due to the insufficient level of competition in the sector. We conclude with some speculation regarding possible scenarios for development between now and 2030.

Richard Woodward, Mehdi Safavi and Piotr Kozarzewski conclude with some speculation regarding possible scenarios for development between now and 2030.

This report was prepared with funding from the MEDPRO (Mediterranean Prospects) project, financed under the European Union’s 7th Framework Programme.