Private Sector Development Impact Assessment Initiative: Assessing the Effectiveness of Economic Growth Programs

The U.S. Agency for International Development (USAID) Private Sector Development Impact Assessment Initiative (PSD IAI)—created by USAID’s Office of Microenterprise Development in 2003—was established to gauge the effectiveness of a “new generation” of economic growth (EG) programs that had recently emerged with funding from USAID and other donors. These new-generation programs promised to achieve economic growth and poverty reduction through a more complex and holistic set of interventions than had been used in the past. Previously, specific types of EG interventions—such as business environment reform, trade facilitation, market access and linkages, rural and value chain finance, business service provision, and input market improvements—were usually addressed by distinct projects, each of which was presumed to provide the missing ingredient that could unlock growth. Today, project implementers look at private sector development more holistically. They acknowledge the existence of multiple, interrelated constraints and draw from an integrated set of intervention tools in an effort to foster broad-based growth and catalyze systemic economic change, usually within multiple value chains.