By Noshua Watson
The Initiative for Global Development (IGD) is a network of Fortune 500 CEO-types who are interested in making investments in Africa and other developing regions. Their July 2012 report, “The Business Case for Development”, claims three ways that business can lead to development: achieving growth, improving efficiency, and enhancing the operating environment.
This is a rather interesting way of framing the role of business in development. We know a lot about how business can lead to economic growth (employment, taxes, innovation, investment, creating new markets) and not as much about the extent to which they improve efficiency or enhance the operating environment. In fact, much of the case AGAINST business in development is about how larger companies may stifle smaller, local ones or how corporate activities destabilise fragile regimes.
That said, what if we took businesses at their word and held them accountable to these criteria? Of course, the development community should continue to monitor the human development impacts of achieving growth, increasing efficiency or enhancing the operating environment. But shareholders and stakeholders alike would benefit from businesses meeting the IGD’s claims that businesses achieve growth through product innovation and development and marketing; or improve efficiency through better supply chains and local workforce development or enhance the operating environment through stakeholder dialogue and stability, increased institutional capacity and better governance.
This criteria is also be a useful litmus test for governments. In fact, we already rate them in several ways (e.g. the World Bank Doing Business index, the Legatum Prosperity Index) by the extent to which they create the environment for businesses to generate growth, efficiency and better operations. So why not evaluate businesses by those standards too?