Review of AID's experience in private sector development

After brief reviews of the background and methodology of the study and of PSDI itself, the report provides a conceptual framework for interpreting A.I.D.'s experience in programming PS projects by identifying the distinct features and requirements of PS-led development (firms, markets, international investment, constraints) and the major parameters that shaped A.I.D. programming (resources, limitations). Detailed discussion is then given to A.I.D. and other donor experience in the four key areas of PSDI - policy reform, project assistance to private enterprise, project assistance through private organizations, and mobilizing the Third World's PS for development. A final section assesses implications of the study for future A.I.D. programming in this area. Key findings are that: (1) increased emphasis on host government policy reform can further the development of competitive markets and private enterprises; (2) only 17% of A.I.D.'s FY 1982-84 development assistance budgets was targeted for PS development projects; (3) there are in the Third World both advantages to using PS delivery systems and a large, barely tapped potential for doing so, although public sector involvement is often necessary, either as a direct provider or as a regulator; and (4) A.I.D.'s current institutional strengths suggest expanding PS programming in agricultural production and services, agro-industry, small and medium enterprises, and housing and social services (but not via direct lending to or direct equity investment in individual Third World firms, or support of U.S. private organizations). The report's fundamental suggestion is that A.I.D. continue its approach of balancing private and public initiatives and seek to increase awareness of possibilities for PS development in all Agency activities. Detailed recommendations for specific A.I.D. practices and related studies are included. Appended are descriptions of other-donor PS programs, a synthesis of A.I.D. Special Studies on PS development, and a bibliography of relevant publications.