Post-conflict pro-poor private-sector development: The case of Timor-Leste

Abstract

Post-conflict economic development is central to reducing poverty and improving local livelihoods. In this regard, many post-conflict development plans place a high priority on private-sector development. This paper examines the role of the private sector in post-conflict situations and discusses possible interventions for economic recovery based on a review of the literature and fieldwork in Timor-Leste. The paper identifies key factors critical to pro-poor private-sector development in post-conflict situations, with particular reference to Timor-Leste, considers some of the major obstacles, and suggests public policies to identify promising export products and to strengthen small and micro enterprises that might help the country to achieve pro-poor economic recovery and growth.

Acknowledgements

I would like to thank the anonymous referee for helpful comments and Mr Kohei Kiya for his assistance. The views and analyses are solely my own.

Notes

1. The private sector in this paper is defined as a basic organising principle for economic activity in a market economy where physical and financial capital is privately owned; competition in markets drives allocation and production; and economic decisions are made and risks taken under private initiative.

2. The countries were selected on the basis that post-conflict recovery started in the early 1990s, and that official documentation and reports on the recovery process were available.

3. The survey, carried out in 2002, covered manufacturers accounting for about 65 per cent of manufacturing employment, and was designed to examine the cost of doing business and to generate cross-country comparisons of competitiveness and investment climate.

4. The report is not clear on whether the definition includes trade and services as well as manufacturing and industry.

5. SMEs here are broadly defined and very heterogeneous. Micro enterprises are family businesses or self-employed people operating mostly in the informal economy. SMEs normally operate in the informal economy, employing wage-earning workers. This paper will include both micro enterprises and SMEs, since the two are not distinct in Timor-Leste, despite the government's definition of SMEs.

6. The survey has its limitations, since it covers only those registered with the ministry and the majority of home-based work may not have been accounted for. However, it does give us a rough yet important idea of Timorese private business activities.

7. There are no primary data on the number of workers in the private sector. According to Queipo (2001), in 1997 there were 13,355 workers and 4494 entities in the private sector.

8. These transportation costs limit access to social services, too. People living in remote rural areas have found it difficult to reach hospitals and health clinics in urban areas. As a result, their poverty has intensified.

9. Indeed, the credit line set by SEP I was US$50,000, which was far above the capital needed for the start-up of SMEs in Timor-Leste.

10. In informal interviews with non-Timorese business managers in Dili, the managers reported a preference for Filipino or Malay workers over Timorese workers, mainly because of their work ethic. This needs to be carefully explored.

Additional information

Notes on contributors

Takayoshi Kusago

Takayoshi Kusago is Associate Professor of Social and Economic Development at Hokkaido University. He received his PhD from the University of Wisconsin, Madison. His current research interests include sustainability of development projects, disability and poverty, and post-conflict social and economic development.