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Development Account Projects

Fostering private-public partnerships to strengthen national capacities for designing, implementing and evaluating development-oriented macroeconomic policies to generate employment, growth and poverty reduction

Background:

In many developing countries, especially in the least developed countries, formulation of macroeconomic policies is seen as the prerogative of the ministry of finance and the central bank authorities. Ministries of finance are usually entrusted with identifying specific budget lines to reduce or increase public sector spending, propose tax or non-tax measures to ensure fiscal balance and submit a final budget to political authorities for approval. Subsequently, the budget proposal is debated in parliament, which allows stakeholders, including the private sector, to provide feedback and influence the budget through the elected representatives. In addition, various informal lobbying mechanisms seek to ensure that the elected representatives approve a budget that broadly meets the expectations of stakeholders.
The process of incorporating stakeholders’ concerns and feedback is seldom inclusive or transparent. Private sector groups, such as chambers of commerce, exporters’ groups, manufacturers’ associations, and trade unions, exert varying degrees of influence on the lawmakers to tilt the budget in one direction or the other. Influencing this critical fiscal policy instrument often takes a narrow sectoral approach, without consideration as to how an allocation increase in one sector, or a particular tax cut, affects all other related sectors. Private sector representatives rarely take a comprehensive view of the budget from the perspective of a general equilibrium analysis of the budget’s effects on employment, growth and welfare.
The United Nations recognizes the pivotal role that the private sector must play to generate growth, reduce unemployment, foster development and facilitate the achievement of the Millennium Development Goals. In paragraph 20 of the United Nations Millennium Declaration (see General Assembly resolution 55/2), Member States resolved to develop strong partnerships with the private sector and with civil society organizations in pursuit of development and poverty eradication. Following the Declaration, a number of United Nations resolutions and outcome documents reiterated the need for strengthening public-private partnerships. In paragraph 56 of the outcome document of the High-level Plenary Meeting of the General Assembly on the Millennium Development Goals in 2010, the General Assembly reiterated that the private sector plays a vital role in development in many countries, including through public-private partnerships and by generating employment and investment, developing new technologies and enabling sustained, inclusive and equitable economic growth.
The project undertakes to make the process of designing, implementing and evaluating macroeconomic policies more inclusive, transparent and accountable by ensuring broad-based participation of the private sector and other stakeholders. It will, at the request of participating Member States, facilitate the establishment of national platform(s) for multi-stakeholder dialogue on macroeconomic policies and the way in which these policies can support employment generation, growth and development. The project will also have a distinct capacity-development focus by training monetary and finance authorities, national chambers of commerce and media so that the key stakeholders have enhanced capacities and a common understanding for analysing the cross-sectoral impacts of macroeconomic policies on employment, growth and development.

Objective:

To foster effective PPP in developing countries to  design, implement and evaluate development-oriented macroeconomic policies, ensuring broad stakeholder participation and enhancing accountability and transparency in macroeconomic policy making processes to promote employment, growth and poverty reduction

Expected accomplishments:

  • Strengthened and more transparent engagement between private sector stakeholders and finance and monetary authorities, facilitating national dialogues on the objectives and impact of various development-oriented macroeconomic policies and strengthened capacities of fiscal and monetary authorities to clearly and effectively communicate the intended objectives of various macroeconomic policy decisions and their impact on employment, growth and equity
  • Enhanced capacities of national chambers of commerce and media to analyze and understand the impact of various macroeconomic policies on specific sectors as well as on employment, income, growth and productivity

Implementation status:

In progress.