The growing role of the private sector in development co-operation: challenges for global governance

Global development is increasingly being seen as reliant on the private sector, both for its financing and project implementation1. As Development Assistance Committee (DAC) members attempt to redistribute the burden of sponsoring initiatives abroad, they tend to shift this burden to profit-seeking corporations, while counting the funds provided to trigger investments by such corporations as part of their conceded Official Development Assistance (ODA)2. In so doing, they are also responding to the perceived dearth of resources from multilateral sources, especially the UN. Additionally, by engaging the private sector they enable and incentivise their own corporations to compete with those from China in developing countries where Chinese economic presence is deeply felt.

However, the engagement of the private sector in development co-operation efforts and its treatment as an integral sponsor of such co-operation overseas is not limited to traditional donors, but can also be seen among Southern providers, especially those from Asia. Most notably, the concept of ‘Development Compact’, championed by India, grants the private sector a privileged position in international development co-operation across five different levels, namely, trade and investment; technology; skills upgrade; lines of credit and grants.

Today, the COVID-19 pandemic and climate change both illustrate a growing and urgent need for the provision of global public goods. As these public goods expand in number but become relatively more affordable, they can be provided by certain private corporations that enjoy enhanced market power. Development partnerships and governance structures which include the private sector may also become demonstrably both more legitimate and more efficient than those set-up solely between governments, which are seen as less inclusive, highly bureaucratised and slow-moving.

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