Private sector development (PSD) has taken on an increasingly prominent role in both the debates as well as budgets of international development cooperation in recent years. PSD interventions generally put emphasis on comparative advantage, an enabling business environment and horizontal/“neutral” policies. However, the debate on the role of industrial policy in supporting economic development is re-emerging. Important drivers of this debate have been the financial crisis, “green growth” initiatives, the obvious success of China as an industrial powerhouse, and the increasing locational competition for high value-added activities.

While the promotion of local private sector activities in Global South countries and the support of donor countries’ business activities in partner countries have for a long time been part of development cooperation strategies, the private sector has more recently also taken on a more proactive role in development policy. Businesses, particularly international ones, are increasingly given space in international and national policy discussions, acting as a partner to address development challenges and designing, financing and implementing development activities together with official development actors.

Important questions emerge in this context that ÖFSE assesses:

• What are the reasons for the increasing importance of PSD?
• Which activities are currently subsumed under the term private sector development by different actors, donors and institutions? What strategies, concepts and theoretical approaches are being pursued?
• To what extent do PSD interventions reflect the interests of the private sector in partner countries or of businesses of donor countries?
• How have discourses and policies changed with the, mostly international, private sector becoming increasingly a partner (and not only a tool) for development?
• How can PSD interventions contribute to inclusive development and poverty reduction?
• What is the role of industrial policy in PSD interventions? To what extent is the re-emerging debate on industrial policy reflected in new generations of PSD interventions?
• Which industrial policy measures are required, that support structural change as well as employment creation, decent jobs and environmental sustainability?