The Private Sector: Why Does It Matter In Economic Development?
Economic development has been a paramount topic lately. When a government is in a state of financial flux and uncertainty, it has negative effects on its citizens in a few manners. Economic development generates the conditions for economic growth and an improved quality of life through the expansion of the scope on organizational, societal, and individual levels. Another key feature is for all three levels to support innovation, decreased costs, and responsibly produce and trade beneficial goods and services.
So what role does the private sector play? Economic development necessitates that efficient, collaborative organizations are focused on supporting mutual advancement for both the private and public sectors.
Shared Value and Economic Opportunity
Expanding economic opportunity has a shared value for both the public and private sectors. This shared value is denoted as a value for society and businesses. When business opportunities are created, it facilitates job creation and entrepreneurial opportunities, builds human capital, expands on physical infrastructure, and generates revenue for governments. In addition, shared value promotes a variety of services to other businesses. Economic opportunity is a framework in which individuals can create their own solutions. Some may believe that economic opportunity is a solution itself, however, it is rather the opportunity for individuals to create their own result.
The Role of the Private Sector
Private sector markets drive economic growth, affecting initiative and investment thereby creating productive jobs and increasing income. Trade is also a major driver of economic growth by integrating developing countries into the world economy and establishes benefits for their citizens. Implementing procedures known as complementary strategies to intensify the commercial activity and economic opportunity impact comprehensive business models. For example, building human capital through training programs and shaping public policy can be supported through corporate philanthropy and social investment or through cooperative funding arrangements. Developing human capital is an excellent method for the private sector to play a role in economic development because training programs facilitate the ability for individuals to be more competitive and meet employers’ staffing needs. Shaping public policy is also critical because advocating for policies and incentives that favor innovation and new business formation can promote economic growth.
The public sector oftentimes may not be able to create adequate solutions on their own. We are coming into an age where collaborations and partnerships with the private sector are becoming increasingly important and necessary. By turning to each other, citizens, entrepreneurs, businesses, and government agencies can form appropriate solutions. In this case, by working together both sectors can arrive at solutions as well as allow private sector investment to drive economic growth and development. This growth enhances our standard of living and positively impacts socioeconomic factors, such as job growth, income, class disparity, and the inclusive quality of life.