The New Generation of Private-Sector Development Programming: The Emerging Path to Economic Growth with Poverty Reduction

This microREPORT presents a conceptual framework for understanding the new generation of private-sector development (PSD) programming developed since the mid-1990s by USAID and other donors. The framework offers an exploratory model of PSD and defines the range of options open to donors seeking to accelerate and/or improve PSD in developing and transition economies. PSD, which is vital for economic growth and poverty reduction, is driven by three basic factors: end-market demand; the business environment; and the supply response of firms and industries to demand incentives that reach them through the filter of the business environment. New-generation donor programming generally tries to strengthen supply response and/or improve the business environment. It stresses business relationships (e.g., by working through value chains and clusters) and often combines multiple interventions within a single program. These approaches create a learning agenda for AMAP’s effort to design assessment methodologies that will measure the impacts achieved by the new approaches.