A new partnership between business and development

Abstract

With accelerated globalization, private financial flows to developing countries have dramatically increased, superseding the volume of Official Development Assistance (ODA). Particularly after the 2008 financial crisis, multinational corporations (MNCs) have actively expanded their business operations in emerging economies and developing countries. Furthermore, due to technological progress and reduced costs of transport and telecommunication, the production of goods and services is increasingly becoming fragmented and arranged in global networks spanning many countries (global value chains, GVCs). As a result, the interface between business and development cooperation activities is growing, and major donors began to introduce new instruments to promote public-private partnerships (PPPs) for development. This chapter reviews the recent trends in development partnerships with the private sector, analyzes the practices of major donors (traditional donors such as Western donors and Japan, as well as non-traditional donors such as China and Turkey) and MNCs, and draws implications for the industrialization of latecomer countries. The chapter is divided into two main sections: (1) an overview of development partnerships with the private sector in recent years, and (2) a case study of Ethiopia, which is endeavoring to achieve inclusive and sustainable industrial development.

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