Private sector and global development

The role of Private Sector in development of a country cannot be denied. Economies all over the world have opened up and the governments are taking themselves out from the businesses which can be left to the Private Sector. However, we find that the development of the Private Sector varies from country to country due to various reasons. To measure the same an index has been developed in this research paper which will be called in this paper as “Private Business Facilitation Index (PBFI)”. Similarly, another major factor affecting the per capita GDP of a country is the Corruption Index. With the technology diffusion to various extents the corruption has been controlled to some extent and it has helped to bring about greater transparency. To measure technology diffusion, a “Technology Diffusion Index (TDI)” has been introduced based on certain parameters. This paper analyses the effect of all these factors on the GDP and an effort has been made to empirically establish that all these factors have significant impact on the per capita GDP of a country.

The main conclusions, in brief, of the study are:-

1. Urbanization is a function of PBFI i.e. with facilitation of Private Business, urbanization increases as also the urban jobs.

2. The study supports the hypothesis that as privatization deepness increases, it reduces corruption through the channel of introducing new technologies that make the whole gamut of processes transparent. In other words, formal private sector is in an enabling position to reduce corruption in a country.

3. The absolute poverty defined as daily income less than $1 has come down with the increase in urban population, which in fact has accompanied increase in deepening of the private sector in the developing economies.

The analysis suggests that informal private sector has great deal and capacity to reduce poverty and accelerate growth. At the end, the paper suggests the measures to promote informal Private Sector and bring it into the fold of the formal framework in order to empower poor people by providing a broad range of products and services at lower prices.