Facilitating business activity

Fostering socioeconomic development requires strong private sector performance. The private sector is crucial to poverty reduction, improvements in people’s lives, inclusive growth, better access to critical goods and basic services, and increased tax revenues. This is because in most countries, the private sector can often have a more direct, immediate impact than the government in addressing issues of poverty and underdevelopment. To operate effectively, a business needs employees; therefore the private sector is a major generator of employment opportunities and reliable incomes. The private sector is also a key driver of economic growth through its contribution to a country’s GDP. A growing economy favours the expansion of businesses, as well as competition among them. This pushes businesses to innovate and adopt new technologies in order to become more productive. Rising productivity not only generates higher returns for firms, but also has potential to increase wages of their employees, consequently improving people’s lives. Profitable private sector activity also increases the government budget through growing tax revenues, which enables the government to allocate more money for improving such fundamentals as human and physical capital of the country. Additionally, the largescale production of essential goods and services helps keep their prices down, consequently increasing the real effective incomes of poor people. Numerous development institutions have already acknowledged the importance of the private sector’s role in the inclusive development process and strive for its promotion in developing countries worldwide.

Related Subject(s): Economic and Social Development

Countries: Myanmar