The climate facing private businesses in developing countries over the coming year will be conditioned as much by forces in the world economy as by events at home. The strong business connections that have emerged between developing countries and the rest of the world, through trade and financial flows, mean that few businesses can be entirely insulated from developments abroad. So important have these linkages become that even small businessmen selling on the local market will be affected in some way by the changes in prices, interest rates, and trade flows that are taking place in the outside world. These changes will pose threats or open up opportunities, depending on the economic environment in which they operate. In many countries, business activity continues to suffer because the environment, in particular the financial environment, is not conducive to growth. This paper reviews prospects for business conditions in developing countries, focussing on events and issues that have taken place in the recent past and that are likely to be of importance through 1990. The paper is in four parts, each of which concentrates on a different aspect of the business climate.