Private Sector Strategy

The World Bank recognizes that private sector development is a crucial element of its overall mission of reducing poverty worldwide. Then, the private sector becomes the main engine for driving economic growth, improving living standards and creating jobs. This also means that the role of the public sector needs to be redefined and many public sector institutions must play a different and important role as in developed market economies. The World Bank’s private sector development strategy provides the underlying framework for PSD activities for all client countries. The World Bank private sector development strategy boasts the objective of extending the benefits of markets to the poor and improving access and delivery of basic services. This comprehensive approach is supported by four key areas of intervention:
 
 Investment climate
 Direct support to firms
 Infrastructure
 Social sectors

In response to the unique characteristics of ECA clients, the focus of application of the World Bank’s strategy hinges around increasing productivity and growth of the private sector within the region. The figure below represents the five major strategic pillars identified within ECA in direct support of the overall Bank strategy, and the specific focus of the region.

The ECA strategic pillars provide an operational context for the four major areas of intervention identified at the Bank-wide level. Specific measures have been incorporated into the PSD strategy to reflect the differing stages of PSD development and unique circumstances faced by the transition economies. In particular, the ECA strategy includes a focus on assisting countries in enhancing their competitiveness prospects through innovation and the use of technology, as well as assisting countries within the region in completing their privatization agendas, undertaking post-privatization programs and rehabilitating lagging monoindustrial regions. A major focus of the strategy involves alignment with EU benchmarks, and providing assistance towards the accession process in EU candidate countries.

Cross-Country PSD Challenges in ECA

	Growth in ECA continues to be strong, but unemployment (especially among the young) and iformality remains high.
	ECA is improving its business environment but ket challenges remain, including access to finance.
	ECA countries have strong scientific tradition, but low use of technology and innovation and lack of adequate skills limit productivity.
	Low economic diversification in primary producers (Russia, Kazakhstan, Azerbaijan and Ukraine).
	High industrial concentration, unfinished privatization agenda and meager role of the SME sector in most non-EU countries.