Implementing supportive policies to build a vibrant private sector as a driver of structural transformation

UNCTAD Policy Brief No. 89

The private sector – one of the eight categories of the UNCTAD Productive Capacities Index – can be a catalyst for productive capacity development and structural transformation, required to achieve sustainable development.

Fostering entrepreneurship and stimulating private sector development and competitiveness through supportive policies and strategic actions should be a priority in the least developed countries (LDCs), to catch up with other country groups.

Building on the private sector category of the Index, which reports on cross-border trade facilitation, access to finance and business support, this policy brief looks at how the private sector contributes to the development of productive capacities and at the policies that can be used to support its growth.

Key points:

  • Despite recent improvements, the private sector in LDCs lacks medium-sized enterprises and remains largely composed of informal firms, small firms and microenterprises operating in low value added sectors.
  • Constraints that prevent small enterprises from growing need to be addressed through government policies. The UNCTAD Productive Capacities Index can provide valuable information in designing effective policies.
  • Private sector policies should foster the creation of small and medium-sized enterprises and the scale-up of existing businesses.
  • Effective policies require extensive consultation and collaboration between the public and private sectors.
14 Oct 2021