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Strategies for Development in Conflict Affected Countries in the ESCWA Region: The role of the state and private sector

2009 — By United Nations Economic and Social Commission for Western Asia

This study on private sector resilience in conflict-affected countries in the ESCWA region is part of a series of publications, which examines mechanisms and policies for development in spite of conflict. The studies include policy recommendations that are aimed at enhancing the capacity of policymakers in countries experiencing conflict and political tensions to develop appropriate strategies and programmes for the region to attain social and economic development goals, including the Millennium Development Goals.

The study recognizes the important role of the State as an engine of growth in achieving development goals, including its fundamental role in the development of the private sector. This is particularly relevant in countries affected by conflict in the ESCWA region due to the weak nature of the private sector and, therefore, the need for an increasingly responsible role of the State during the period of transition to a more resilient and developed private sector. The private sector in this region is still too small to be solely relied upon to generate high investment rates and to absorb unemployment. Indeed, political instability and fragile security impede foreign direct investment and discourage private investment. The role of the developmental State is crucial in harnessing resources for development, which includes private investment, especially in post-conflict countries.

While focusing on the impact of conflict on private sector resilience in the ESCWA region, the study attempts to understand the importance of the role of the State and its ability to create an enabling environment for development and for enhancing the resilience of the private sector within conflict-affected countries in this region, while presenting an analysis of two case studies, namely Iraq and Palestine. Through this analysis, the study proposes recommendations for Iraq, Palestine, regional countries and the international community on the development of regional/national policies and programmes to support private sector development while mitigating the impact of conflict on growth and development in the region.