The engagement of the Russian Federation into the system of international development assistance, as well as its accession to DAC OECD, implies that Russian authorities plan to allocate extra resources to implement development assistance projects in developing countries.
This is in line with DAC principles, as well as with the principles of innovative development finance. In light of the fiscal problems that the Russian economy is experiencing, the increase of public resources for development aid seems to be an incredible scenario. That is why new sources of finance are required.
Such sources can be generated by Russian businesses operating in developing countries. It is not only Overseas Development Aid (ODA), but also private capital, which makes a major contribution to the development of capital-scarce developing countries and helps to smooth spending throughout the business cycle in the recipient country. From a theoretical perspective business and government can be mutually reinforcing in terms of the implementation of corporate social responsibility (CSR) and ODA-related projects in developing countries. What is more, public-private partnership (PPP) can also be a splendid mechanism to unite public and private resources for developing countries. However, in practice Russian businesses lack incentives to engage in development assistance-relevant projects and are underrepresented at the developing countries’ markets.
Public-private partnership (PPP) and corporate social responsibility (CSR) are those mechanisms which could complement the existing and further development assistance programs implemented by Russia and other international donors, as well as to provide positive socioeconomic effects to support business activity. Such kind of cooperation would contribute not only to strengthening the position of national companies in foreign markets, but also to the development of the investment climate, which provides a basis for economic growth.
Nowadays Russian businesses and the government do not have a partnership position on cooperation in developing countries. On the one hand, the Russian government should develop conditions to engage businesses into international development assistance programs. On the other hand businesses should express their own vision regarding where governmental support is needed, providing information on planned projects which correlate with governmental projects in the field of international development assistance.
The mechanisms of PPP and CSR could expand the business’ stimulus to participate in international development assistance programs. The engagement of business into development assistance-related projects could contribute to the establishment of the Russian system for international development assistance, which assumes business to be one of the key partners of development.
Dr. Yuriy Zaitsev is a researcher at the Institute of Applied Economic Studies, Russian Academy of National Economy and Public Administration, Moscow. Dr. Zaytsev is also a Visiting Research Fellow for "Rising Powers in International Development Programme", Institute of Development Studies at Sussex University
You can read the full article, ‘Russian Business Investments in Developing Economies: Problems and Outlook’, by Dr Yuriy Zaitsev on the Russian International Affairs Council (RIAC) website.