Transforming the Development Landscape

Transforming the Development Landscape: The Role of the Private Sector

LAEL BRAINARD editor
Copyright Date: 2006
Pages: 143
https://www.jstor.org/stable/10.7864/j.ctt6wpfx0
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  • Book Info
    Transforming the Development Landscape
    Book Description:

    Private sector activity is crucial for development. It shapes the investment climate, mobilizes innovation and financing in areas such as global health, and can either cause or mitigate social and environmental harm. Yet so far, the international development debate has not focused on the role of the private sector.

    This volume -written by members of the private sector, philanthropic organizations, and academia -investigates ways to galvanize the private sector in the fight against global poverty. Using a bottom-up approach, they describe how the private sector affects growth and poverty alleviation. They also review the impediments to private capital investment, and discuss various approaches to risk mitigation, including public sector enhancements, and identify some specific new plans for financing development in neglected markets, including an equity-based model for financing small-to-medium-sized enterprises. From the top-down, the authors look at the social and environmental impact of private sector activities, investigate public-private partnerships, explore new perspectives on the role of multinationals, and discuss an in-depth case study of these issues as they relate to global public health. In addition to providing a broad overview of the current issues, this forward-looking volume assesses the action-oriented initiatives that already exist, and provides templates and suggestions for new initiatives and partnerships.

    Contributors include David DeFerranti (Brookings Institution), Timothy Freundlich (Calvert Social Investment Foundation), Ross Levine (World Bank), Sylvia Mathews (Gates Foundation), Jane Nelson (Harvard University's Kennedy School of Government), Alan Patricof (APAX Partners), Warrick Smith (World Bank), and Julie Sunderland (APAX Partners).

    eISBN: 978-0-8157-1126-1
    Subjects: Business, Sociology, Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Foreword
    (pp. vii-x)
    Strobe Talbott

    THE NEW MILLENNIUM has ushered in a heightened public awareness of global poverty and a renewed spirit of generosity among developed nations. So far, the public agenda has focused primarily on boosting official assistance and canceling official debt, with much less attention directed at the most dynamic engine of growth and poverty alleviation: the private sector. Yet private enterprise belongs at the very center of the development enterprise. By generating jobs, serving the underserved, promoting innovation, and spurring productivity, indigenous private sector development can raise living standards and promote opportunity. Indeed, leaders of poor nations have placed private sector development...

  4. 1 The Private Sector in the Fight against Global Poverty
    (pp. 1-28)
    Lael Brainard and Vinca LaFleur

    ATRIO OF KEY INTERNATIONAL meetings marked 2005 as a pivotal year for the global antipoverty movement: the Gleneagles Group of Eight (G-8) Summit in July, where British prime minister Tony Blair pledged to put Africa’s challenges front and center; the United Nations General Assembly’s review of the Millennium Development Goals in September; and the World Trade Organization’s ministerial meeting in December, where the fate of the Doha Development Agenda hung in the balance. Each meeting offered opportunities to help turn the tide on global poverty.

    At the same time, civil society groups were mobilizing worldwide to prod political leaders toward...

  5. 2 Unleashing Entrepreneurship
    (pp. 29-39)
    Warrick Smith

    TODAY, FEW INFORMED commentators question that the private sector plays a critical role in growth and poverty reduction. The ideological debates of the past are giving way to more pragmatic discussions about how best to unleash and expand that contribution while preserving other social values. New research is also providing fresh insights into what works and what does not. Many developing countries are making huge strides in acting on this agenda and achieving dramatic reductions in poverty as a result. China and India provide the most dramatic examples, but important successes can also be seen in countries as diverse as...

  6. 3 Leveraging the Development Impact of Business in the Fight against Global Poverty
    (pp. 40-54)
    Jane Nelson

    DURING THE PAST TWO DECADES, the forces of political transformation, economic globalization, and technical innovation have resulted in an unprecedented transfer of assets to the private sector, bringing private enterprise to the heart of the international development agenda. Though small and medium-size enterprises and microenterprises account for the bulk of economic activity and job creation in most countries, the global reach and influence of multinational corporations have grown substantially. The United Nations estimates that their number has almost doubled from 37,000 in 1990 to more than 60,000 today, with some 800,000 foreign affiliates and millions of suppliers and distributors operating...

  7. 4 Blended Value Investment and a Living Return
    (pp. 55-65)
    Timothy Freundlich

    CONVENTIONAL INVESTING, and the subsequent creation of economic value, has by and large been viewed as an activity separate and distinct from efforts to create social value and positive environmental impact. The traditional view is that companies and investment managers fulfill their social responsibilities simply by generating the greatest possible financial return, regardless of the social and environmental costs involved, with each investor then deciding how best to “do good” with the profits. Essentially, the mainstream model says, “Let’s maximize the risk-adjusted financial return in a vacuum, and then give it away later.”

    Today’s investors face a challenge and an...

  8. 5 Should Government and Aid Agencies Subsidize Small Firms?
    (pp. 66-73)
    Ross Levine

    SHOULD COUNTRIES AND international aid agencies subsidize small and medium-size enterprises (SMEs)? Subsidization can take many forms, including government guarantees, government-sponsored reductions in interest rates, and government-run directed-credit programs. Many argue that targeted assistance for SMEs is an effective strategy for spurring entrepreneurship, reducing poverty, lowering income inequality, and stimulating economic growth. Some skeptics, however, challenge this conclusion and argue that SMEs are at best a characteristic of successful countries, not a cause of that success.

    The World Bank and other international financial institutions have clearly taken sides in this debate. For example, the World Bank Group approved more than...

  9. 6 Venture Capital for Development
    (pp. 74-84)
    Alan J. Patricof and Julie E. Sunderland

    THE DEVELOPING WORLD, and Africa in particular, faces a dearth of risk capital that has constrained and will continue to constrain growth. Donors need to face the reality that the young companies that can really move the needle on innovation, inspiration, and employment need high-risk, reasonably sized equity investments to grow, not the limited doles of short-term, high-interest debt currently provided.

    In the developed world, the young growth companies critical to innovative capacity and employment generation are financed with long-term, permanent equity capital. When a company is growing rapidly, it cannot generate sufficient cash through its current operations to support...

  10. 7 Innovative Financing Options and the Fight against Global Poverty: What’s New and What Next?
    (pp. 85-106)
    David de Ferranti

    CAN INNOVATIVE APPROACHES to mobilizing and utilizing financial resources make a difference in the fight against global poverty? Potentially yes, this chapter argues—but with a caveat. To get from “potentially” to “certainly” will require much more practical experience with, and careful assessment of, the best of the emerging proposals, few of which have been adequately tested in action thus far.

    Further, many proposals, including some that are presently much touted, may not survive this implementation test. Only a few may, in the end, merit full scaling up. Also, though a few may make noticeable contributions, none is likely to...

  11. 8 2 + 2 = 5: A Pragmatic View of Partnerships between Official Donors and Multinational Corporations
    (pp. 107-123)
    Larry Cooley

    POLITICAL AND ECONOMIC developments during the past two decades have changed the level, composition, and destination of private investment and foreign aid flowing into developing countries and transition economies. Private flows (including remittances) and public funding of development projects have both risen during this period, but private flows have increased much more rapidly—now constituting more than 80 percent of funds moving from the United States into developing and transition countries (as compared with less than 30 percent in the 1970s).

    Beginning with a focus on commercial agriculture in the 1960s, followed, successively, by attention to macroeconomic reform, structural adjustment,...

  12. 9 Financing for Global Health
    (pp. 124-134)
    Rajiv Shah and Sylvia Mathews

    CURRENT FINANCING FOR GLOBAL HEALTH is not meeting the needs of the developing world. It is critical for private foundations to form partnerships with other nongovernmental organizations and the public and private sectors to help mobilize new resources for global health and to improve the effectiveness of these resources. This short chapter includes a brief overview of development assistance for health (DAH) and a short description of two important public-private initiatives: the Vaccine Fund’s International Finance Facility for Immunization (IFFIm) and a description of the World Bank’s debt buydowns for successful polio eradication efforts.

    Despite significant advances in global health...

  13. Index
    (pp. 135-144)
  14. Back Matter
    (pp. 145-146)