Development Challenges C. Private Sector Development 15.
Private investment remains low and continues to lag public investment.
While investment rates in the PDMCs were generally about 25-35 percent during the 1990s, this was substantially public investment. The virtuous circle of economic growth, private savings, and private investment has yet to occur in the PDMCs, as reflected by the low growth rates and little deepening of the financial sectors. Despite the multitude of reforms undertaken in macroeconomic management and private sector development since the mid-1990s, the PDMCs remain heavily dependent on official foreign aid to finance their economic development. For the most part, the flow of private sector investments in the Pacific has been modest and limited to a narrow range of industries and countries. Domestic savings mobilization is low because there are few incentives to save.