Business for development?

Researcher: Lisa Román
Project established in 2013

Private sector development is important in aid discussions. For example, the Busan Partnership for Effective Development Cooperation conference in 2011 stated that ”[w]e recognize the central role of the private sector in advancing innovation, creating wealth, income and jobs, mobilizing domestic resources and in turn contributing to poverty reduction” (Outcome Document, §32, 2011). But while the private sector is repeatedly referred to in development contexts, there is a lot of variation as to how and why.

This project has two parts. The first part is an analytic survey, sorting out and problematizing different roles of the private sector in development. Two distinct aspects are highlighted. Firstly, developing a private sector is an important part of the development process in any country. Domestic market expansion and entrepreneurship is crucial for economic growth and thus for employment, empowerment, and well-being. From this perspective, the private sector is a goal for development efforts. Foreign investors are part of this. They bring new capital, new employment opportunities, new technologies and access to international markets.

Secondly, the private sector serves as a tool for more general development efforts. Not only is the private sector often a source of finance for development projects, while private actors frequently are the implementers of these projects. In addition, the private sector, and notably foreign actors/investors, is at times acting/expected to act as ambassadors for global public goods such as human rights, labor standards, environmental protection, and anti-corruption (as codified in the UN initiative on Global Compact) or for Corporate Social Responsibility (CSR; a form of corporate self-regulation, now transforming into the concept of Corporate Sustainability) or other ethic principles guiding global business activities.

These aspects of the private sector’s contribution to development sometimes overlap, since the development of a private sector in any given country is in itself a tool for more general development. And any private enterprise engaged to promote business and market expansion per se may also serve as a more general tool for development. A distinction between the roles may however clarify how the private sector may be addressed for various purposes. The taxonomy thus produced is used for an examination of Swedish aid interventions in the area of private sector development and business for development.

The second part digs deeper into the way the private sector serves as a tool for development. Arguably, the use of business for general development purposes is an attempt by external actors to achieve institutional change by changing social norms. This project aims to explore the experiences and potential of this idea. This will be done by identifying examples of such endeavors through corporations' own statement on their rationales and approaches, and interviews with stake-holders on their perception of these relationships.  In addition, a number of potentially successful cases of corporate promotion of development will be identified and explored. The aim is both to establish to what extent these cases indeed are successful from the perspective of institutional change, and if so what features and key mechanisms may explain the achievements.

The project will seek to identify relevant mechanisms for making use of the business sector to promote development, which is clearly an ambition of the Swedish policy for development. Understanding potential obstacles, trade-offs and fruitful interventions better, will provide input to the learning process in advancing tools currently explored by aid agencies, and possibly also increase the legitimacy of this approach to development. Recurring meetings with development agencies is scheduled as part of the project, for discussions on findings and future avenues.

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