Private Sector and Development

This issue suggests that there are many areas in which, by giving the market a push, development actors can strengthen the private sector’s ability to reduce poverty.

Considerable evidence is emerging to suggest that commercial microfinance may well have undermined prospects for sustainable socio-economic development in Southeast Europe.

Microfinance institutions have served millions of clients in the region, mainly low income families and microenterprises that would not otherwise have had access to financial services.

The experience of Guarantee Funds in South Serbia shows how the right policies can help address the liquidity constraints that often hamper the development of SMEs.

GDP-indexed bonds can help make public debt structures more sustainable, reduce the risks of currency crises, and yield substantial benefits in economic performance.

While the weight of state-owned firms in the Russian economy has expanded dramatically in recent years, this does not represent a return to the policies of the pre-reform era.

In Russia, informal business practices are needed to ‘get things done’. They persist because interpersonal trust compensates for popular distrust of state and financial institutions.

In Ukraine, municipal governments have created ‘one-stop shops’ to simplify business registration and boost employment. Certainly, they have a role to play, but a wider approach is needed.

In Eastern Europe and the CIS, social enterprises could do more to reduce poverty and unemployment if the policy and regulatory environment were more hospitable.

Agricultural privatization has led to land consolidation in some areas, and excessive fragmentation in others, with no clear link between privatization approaches and resulting land use patterns.

Will ‘corporate social responsibility’ move beyond its current marginal role in in Eastern Europe and the CIS?

For a brief look at events in the region.