How Business Is Promoting Global Development

By Stephen Jordan and Don Eberly

As the UN General Assembly meeting draws near and with it, discussion of the status of the Millennium Development Goals, development agencies, multilateral organizations, and governments in poor countries are waking up to the fact that multinational companies may be vital for their success.

Public-private partnerships have never been hotter—multinational corporations view them as an opportunity to practice corporate citizenship and expand their markets, while their public partners in low-income nations see them as sources of much-needed investment and vehicles to achieve a higher living standard.

In the past, development organizations viewed companies as passive sources of philanthropic gifts for relief and development projects, or as obstacles and challenges.  Today, companies are using their core marketplace competencies to deliver novel new business opportunities in low-income countries, often while contributing to social and economic development through social investments.  

Increasingly, the poorest countries are defined by the absence of business, and many of them are working hard to improve their social and economic investment climate. The best thing that can happen to the poor in low-income countries is to be discovered as customers, entrepreneurs and business partners, and then linked to the emerging global economy. A growing number of low- and moderate-income countries, such as Colombia, the Philippines and Ghana, are developing robust local stock exchanges, enabling local firms to raise capital from the considerable untapped pool of local wealth to create more home-grown businesses and jobs. Multinational companies are playing an increasingly important role in aiding and abetting this process.

Corporations are making their mark all across the globe with projects aimed at improving the planet’s health, education and ecological problems.  In a globally connected planet, business is more interested than ever in “doing good and doing well.”  

Two-thirds of the Fortune 500 now actively monitor and track their corporate social responsibility programs. The Business Civic Leadership Center, an affiliate of the U.S. Chamber of Commerce, has found that more than a third of international American Chambers of Commerce have some kind of corporate citizenship program. 

Growing numbers of companies are taking an interest in building customers among the consumer class and “newly affluent” in emerging markets. Procter & Gamble is scaling its basic consumer products such as soap and shampoo to be viable in low-income communities worldwide.  Citigroup announced the launch of a major “down market” banking presence throughout emerging markets in Asia. GE has tailored its business growth strategy to reach low-income consumers and expects revenues from emerging markets to expand by 30% to 40% by 2010. New customers, new markets, and new partnerships in a flattening global marketplace are producing unprecedented opportunities for smaller indigenous firms to build ties to regional and global markets as suppliers and distributors.

Coca-Cola is making major investments to stem the spread of HIV-AIDS.  IBM is sponsoring a global “reinventing education” program that is confronting some of the toughest educational problems.  Marathon Oil is involved in malaria eradication in Equatorial New Guinea. Pharmaceutical companies like Abbott, GlaxoSmithKline, Merck, and Eli Lilly are some of the largest private-sector donors to emerging markets in the world.

Corporate citizenship is not just dominated by massive corporations. Armed with innovative problem-solving technologies and motivated by an entrepreneurial spirit, an entirely new class of social entrepreneur is emerging as the latest actor in international development. Not interested in large aid programs generated by top-down command and control bureaucracies, these social entrepreneurs are turning instead to small-scale experimentation based on business models and buy-in from low-income communities.  In Kenya, Fairmount Minerals is making available innovative technologies to
provide clean drinking water to low-income communities, and the alternative energy company E+Co is developing solar systems for households in rural Uganda, to name just a few.

A new generation of “venture philanthropists” is determined to challenge older notions of charity by directing resources to projects with proven track records and by bringing to philanthropy the strict performance measures once limited to business enterprise.  Many are investing their resources in a new movement to spur bottom-up business development in the form of micro-enterprise, micro-franchising, partnering with small to medium-size businesses and even developing private equity initiatives to invest in promising developing-world companies.   
 
As the UN General Assembly convenes to take stock of the Millennium Development Goals, and leaders like former president Bill Clinton make unprecedented calls for charity, one of the most positive trends in recent memory is the convergence of social and economic interests.  Now the burden on policy makers is not just to recognize the benefits of corporate citizenship, but to do what they can to realize the potential of this emerging movement.

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Stephen Jordan is Executive Director of and Don Eberly is Senior Consultant for Global Corporate Citizenship at the Business Civic Leadership Center, an affiliate of the U.S. Chamber of Commerce.