Trade Forum Features

How the private sector drives economic growth and well-being

15 September 2014
ITC News
The private sector is the base upon which social development, education, health care and social-security systems rely, writes IOE Secretary-General Brent Wilton.

Since the creation of the original Millennium Development Goals in 2000, the crucial role played by the private sector in delivering economic, social and environmental development has become better understood. In fact, the private sector in every country is simply the community at work and, as a part of that community, business today comprehends its impacts better than ever before. Its influence on economic and social development, respect for the environment, and efficiently and effectively managing resources represents an important contribution to the well-being of its communities.

However, the private sector cannot act alone. Governments have the main responsibility for providing the legislative and regulatory environment that enables businesses to play their part. Vital issues such as open trade policy, sound and stable governance, infrastructure investment, economic and monetary policy, tax and social protection structures, and the costs of doing business must be balanced by governments in a way that gives the private sector the ability and incentive to act.

Take job creation, one of the biggest development challenges anywhere in the world. To meet this challenge, more employers are needed. Existing enterprises cannot absorb the market entrants of today, let alone those in the future. This means that more entrepreneurs are required – people with ideas, drive and a willingness to take risks. How helpful is the business and regulatory environment in your country when people take the decision to start a new business? How helpful is the legal process in registering and sustaining a business? How adapted is your education system in providing would-be entrepreneurs with the skill-set needed to be enterprise and employment creators?

In reality few countries do those things well and in Africa, South Asia, South East Asia and Latin America the environment is often quite hostile to such initiatives. If any of the sustainable development goals are going to have any kind of chance to deliver for our populations beyond 2015, the area of private-sector development and enterprise growth must also be supported by governments. Jobs are the best way out of poverty. We need good jobs – formal-sector jobs through formal sector enterprises, jobs that fit the needs of the modern economy, jobs that through their taxes contribute to the means of development in any country.

If one stands back and looks at the goals we set for our societies, the private sector is the main engine of economic growth. It is the base upon which social development, education, health care and social-security systems rely. Let the private sector it do its job!