Can big business champion development?

The list of global development challenges facing our world today remains daunting. These challenges range from the need to provide the most basic of social services (literacy, water and sanitation, and primary health care) to a sizable proportion of people across the developing world, to helping them contend with varied natural (floods, droughts) and manmade (conflicts) disasters.

There is now a plethora of specialised development agencies working to address the above challenges, yet such entities remain under constant pressure to raise adequate funds to adequately respond to the on-ground needs. While most industrialised countries in the world had agreed in principle to begin allocating 0.7 per cent of their annual income to aid poorer countries around the world back in the 1970s, meeting this modest goal has not proven so easy.

Given the fierce competition for scarce aid resources, many development organisations have increasingly begun looking at big business in an effort to secure the financial and technical resources needed to achieve development goals. Whether profit-making businesses can be convinced to invest in developing countries in ways which can also maximise benefits for the poor, however, remains tricky business.

On the one hand there is criticism of development agencies, such as those affiliated with individual governments or the UN system, partnering with powerful business interests, which in turn have been held responsible for ecological damage or exploiting workers in developing countries in order to maximise profits for their own shareholders. People with a leftist ideological persuasion, in particular, mostly reject involvement of the private sector in trying to address basic human needs. They point to the problems resulting from agencies like the World Bank having increasingly promoted the market mechanism and the involvement of the profit-driven private sector in the provision of basic public services such as health or education. The increasing power that multinational corporations can acquire by becoming providers of international aid itself is thus considered an alarming development, which further encroaches on the domain of public policy-making.

On the other hand, those in favour of involving big business in development work claim that there is nothing inherently wrong if development organisations work with businesses. Such proponents point out that development organisations do, after all, work with, and rely on, financial aid from governments as well, despite their tarnished records at home or abroad. Most industrialised countries which provide aid for development have become powerful due to exploitative legacies of colonialism and imperialism, and they still have implicit geo-strategic interests based on which they make foreign aid commitments. Development agencies also have to work with governments within the developing world, even if they have authoritarian or repressive tendencies, and even commit human rights violations. Therefore, they argue, working with big business in the hope of improving the lives of average people is not unreasonable either.

The use of big business to finance and provide technical input to further development goals is thus clearly a contentious issue, with legitimate issues raised by both sides of the debate. But there are other ways to think about the problems of development agencies involving big business as increasingly prominent stakeholders in the process of development. The resolve, capacity and commitment to address major development problems admittedly varies within and across states. Yet, states are bound by multiple obligations, including constitutional frameworks, obligations to international conventions, and civil society pressure to engage in public works. Corporations are much less encumbered given their primary imperative is to generate profits.

Many NGOs have expressed disapproval of the UN system for having signed the ‘Global Compact’ with large corporations. The growing reliance on pharmaceutical companies or agribusiness corporations to support healthcare or agricultural development initiatives is feared to compromise the integrity of UN agencies and to influence its programme agenda. Partnering with major corporations should not provide these corporations carte blanche to do what they like. It is, however, possible that big business will increasingly use their development support as leverage for deregulation, or for obtaining other concessions from cash-strapped developing countries, which undermines broader development goals.

Published in The Express Tribune, May 14^th, 2016.

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