Thematic Evaluation Study: ADB Support for Strengthening the Enabling Environment for Private Sector Development (Complete Report)

Abstract

Governments and, by implication, institutions such as the Asian Development Bank (ADB) can only do so much to promote economic development and inclusive growth through direct investments. Private sector investment and activity will ultimately have to generate sustained economic growth as well as increases in employment and reductions in poverty. Governments nevertheless have an important role to play in the creation of enabling conditions for private investment and production. ADB’s long-term corporate strategy (Strategy 2020) appropriately identifies PSD as one of the drivers of change and states that ADB will invest in infrastructure and advise governments on the basics of a business-friendly environment, including reliable rules, regulations, and policies that do not disadvantage private enterprises. This evaluation study by the Independent Evaluation Department (IED) reviews ADB’s strategies and assistance programs over the last decade to assess: (i) the strategic relevance of support for strengthening the enabling environment as part of ADB’s PSD efforts, and the responsiveness of this assistance to private sector concerns and government priorities, (ii) results of such support, and (iii) related ADB capacity to further improve its support in line with Strategy 2020 objectives. Strategic relevance is assessed based on a review of corporate and selected country strategies, portfolio analysis, and stakeholder feedback obtained in six case study countries. Project design issues and preliminary results of ADB’s PSD enabling support are assessed based on available evaluation studies, literature review, and desk and selective in-country review of projects seeking to promote public sector management and governance, financial sector development, trade and investment, and private participation in infrastructure (PPI) development, and stakeholder discussions in nine DMCs. The assessment of ADB institutional performance is based on a review of private sector assessments for the case study countries and institutional arrangements and staff skills for dealing with enabling environment issues.