Saturday, 03 February 2024 04:39

Private companies generate 90% of jobs, according to the World Bank

Written by Karla Gutiérrez

The World Bank's Annual Conference on Development Economics (ABCDE), a high-level event of the institution, was recently held.

This year, the theme was the importance of the private sector to generate jobs and support the economy of countries.

In developing countries, the private sector generates around 90% of jobs, more than 60% of output and more than 80% of government revenue. And this extends to other vital aspects of the economy.

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Private entrepreneurs are responsible for the increasing diversity and sophistication of goods and services flowing into markets, while private companies provide a growing share of essential public services in the banking, telecommunications, health and education sectors.

Government policies and actions are important. Governments can create an enabling environment for a competitive and dynamic economy, in which economic growth can occur naturally. They can achieve these outcomes both through macroeconomic stability (e.g., by controlling inflation and public debt) and through effective microeconomic regulations (e.g., by eliminating red tape and reducing labor market rigidities).

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In the case of El Salvador, companies have been receiving different incentives to grow and generate jobs and at the same time to encourage other investors to establish themselves in the country in order to improve the economy.

In 2023 alone, 3,341 new companies were established in the country, according to the Ministry of Economy.

One of the policy conclusions of the conference is that governments alone cannot meet the challenge of growth and resilience. Expectations that they can generate sustained growth and resilience without private sector participation are unreasonable and unrealistic.

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Translated by: A.M