Filling the Gap? The Private Sector's Role in European Development Policy in an Era of Crisis

Patrick Holden

The role of the private sector, as a partner in international development rather than just a recipient of aid, has expanded in recent decades. European states donors and the European Commission have been increasingly bullish about the role that the private sector can play. This is partly based on an explicit recognition of the limited public funds available in an era of financial crisis and austerity. It is also partly recognition of the reality that private sector actors play a crucial role in developing countries that are afflicted by political crisis and conflict. As a part of this process European donors have pushed for the definition of aid to be reformed to include more private sector support activities. This paper will analyse the different ways in which the European Union institutions (mainly the Commission) interact with the private sector. These include direct private sector support instruments, efforts to leverage private investment in support of development objectives and efforts to encourage 'developmentally' responsible behaviour on the part of the private sector. It will trace the thinking behind this and how it relates to ideas and trends in global development policy. These are in turn related to wider geopolitical and geoeconomic trends. Following on from this it will offer a critique (based on a wide range of political economy theories) of the more ambitious hopes for the private sector as an actor in development.

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