Make Money, End Poverty

Corporations really could make the world a better place -- if only the U.N. and state governments would treat them as equal partners. 

Governments at the United Nations are in full swing designing the next blueprint for global development, the successor to the Millennium Development Goals (MDGs). The entire process is important, to be sure, but one particularly notable aspect is that governments are asking corporations to show how they can help make poverty history, while also making money. This represents a big shift since 2000, when the U.N. adopted the original MDGs. That time around, the role of corporations was largely confined to "corporate social responsibility" and "philanthropy."

What is driving this important change? First and foremost, governments have recognized that their ability to help the world's poor, hungry, and sick is quickly diminishing. At the same time, businesses are playing an increasing role in lifting people out of poverty.

USAID's administrator, Rajiv Shah, frequently notes the relationship between sustainable development and private profit. He has declared that in combating poverty, the public sector "need[s] to help companies find profit opportunities abroad, not photo opportunities."

A number of key global trends make up the background for this chorus of support for the private sector. Today, foreign direct investment (FDI) flows into developing countries have surpassed traditional development assistance -- the rate is now five to one -- and over 90 percent of jobs in the world are in the private sector. This is a significant change: Not so long ago, public-sector employment constituted almost half of all employment in certain regions, including Africa.

Looking to the future, too, global infrastructure and national security demands will have enormous consequences for development. Trillions of dollars will be invested in new projects, and companies in the infrastructure sector will be important partners for governments.

In light of these trends, unless governments strategically leverage the private sector, the simple fact is that the world likely will not achieve the forthcoming Sustainable Development Goals (SDGs), including the goal of eradicating extreme poverty. Yet despite recent, positive changes to their relationship, the U.N. and governments still are not utilizing the private sector as a development tool and partner to the fullest degree possible. It's not too late to get the relationship between public and private sector actors sorted out, and the process of creating the SDGs is a good venue in which to start.

To start, governments must stop speaking at private-sector actors and begin to converse with them as equal partners. Norine Kennedy, vice president at the U.S. Council for International Business, recently noted that the private sector is usually engaged at the U.N. in two ways: Its members are either allowed to make two-minute interventions during U.N. meetings or to participate in side events. This modus operandi is prevalent across the board when governments and multilateral organizations try to work with the private sector. Yet this arrangement is neither effective nor supportive of the desires of the business community.

The ongoing process to develop the SDGs exemplifies this problem. In 2012, the U.N. secretary-general announced the formation of a high-level panel to advise on creating the new global development agenda. Last year, the group released an initial report to guide the intergovernmental process that is now underway. While the 26 members of the panel consulted companies and sought input from businesses, only two members were actual representatives of the private sector. Instead of this outdated model of engagement, 50 percent of advisory panels and similar bodies working on strategies for sustainable development should come from corporations and business associations.

The reasoning is simple. In order to be effective in the implementation phase, the private sector needs to be part of setting the agenda in the first place. Only then can the sector be fully and effectively integrated down the road. Consider the force-multiplying effect of heads of state and NGO leaders sitting at the same table as the CEOs of leading corporations -- Coca-Cola, General Electric, Google, Ikea, Toyota -- when a vision for the future is formed.

Having a seat at the table would also help companies achieve their primary goals, including increasing profitability. Of course, the U.N.'s primary responsibility is not to facilitate business, but to serve the public interests of its member states. However, public interests and private profit can converge when partnerships are set up collaboratively. As noted by the U.N.'s initiative for private-sector outreach, the U.N. Global Compact, "Businesses have a built-in motivation to see development succeed. Quite simply, business does better when the world does better, and is literally at a loss in a setting of disease, strife, environmental breakdown, illiteracy, abuse of human rights, arbitrary government practices and impoverishment."

The innovative potential that exists when governments and the private sector find common cause is illustrated through the momentous project that put a man on the moon. The enormous scale of the Apollo program in the 1960s, as well as the novel technological challenges associated with it, meant that the U.S. government had to rely heavily on the private sector to build the hardware and even to operate missions. In short, the public and the private sector leveraged one another's strengths, and NASA's relationship with industry was oriented toward a mutually beneficial partnership serving the greater public interest. Of course, the companies that participated in this project -- and other major government-industrial partnerships in aerospace, defense, and security during the Cold War -- reaped great financial benefits. But this, in turn, laid the foundation for landmark civilian technological spinoffs, such as the Internet, the development of semiconductors, and the introduction of GPS technologies.

A similar strategic partnership between public and private actors is now required. As noted recently by Nigerian CEO and entrepreneur Tony Elumelu, "A global agenda that intends to address the livelihood of people and attack extreme poverty is not set up for success if it does not fully engage the sector of society that controls the most capital, employs the most people, and fosters the most innovation."

Once it is fully at the table, perhaps the largest contribution the business community could make to the forthcoming SDGs would be to improve national infrastructure and security capacity across the developing world. Today, billions of people are in need of clean water, adequate public health facilities, sustainable food and energy solutions, and a plan for societal resiliency against climate change and natural disasters. The market for these upgrades over the next few decades is upwards of $57 trillion, and the market for securing these investments is expected to grow to over $105 billion only in the next few years.

What's missing now is a long-term business plan and capital infusion from both the public and the private sector to get efforts started. Some financing proposals include the establishment of a new global fund, replenished by both the public and private sectors, whose coffers could be used to address the challenges that the SDGs identify. (A similar fund already exists in the fight against HIV/AIDS.) Another idea includes using traditional development assistance to fund private-sector-led solutions, including the building of infrastructure. Both these initiatives would be excellent ways for governments to spend taxpayers' money and for corporations to spend business-development capital.

It is vital that innovative financing mechanisms be top priorities in the agenda for the SDGs. In short, they need to be decided upon now and robustly implemented soon.

The SDGs can set a new tone for how the world approaches development. And critical in setting that tone is making room for the private sector in the most meaningful way possible. The designers of the goals need to bring the private sector to the table and clearly communicate the nexus between the public interest and private profit. They also need to prepare ways to maximize the potential of that nexus, so the world can hit the ground running with the new development goals. If this can all be achieved, there will be winners all around: governments, the private sector, and -- most importantly -- people across the globe.


Democracy Lab

Thailand Needs to Talk

The latest military coup in Thailand won't ensure real stability unless the country's new rulers address the deeper causes of political conflict.

The Kingdom of Thailand is a constitutional graveyard: In just over 80 years, it's gone through 18 failed constitutions in a carousel of military coups and corrupt civilian governments. And, in recent years, the civilians have likewise been fighting among themselves, pitting the so-called Red Shirt movement, strong in the North and rural areas, against the Yellow Shirts of Bangkok and the South, in an increasingly violent conflict that has destabilized the country. Now, as the smoke clears over mid-May's dramatic coup, Thailand's new military government has suspended the constitution once again. Though the military has been vague regarding specifics, they will put forth a temporary constitution, which will eventually to be followed by something more permanent: Lucky #19.

With the coup itself now behind us we can still hope that the military government may be able to break the vicious cycle once and for all. To make sure the next government sticks, however, the military will have to make a radical departure from tradition. It must resist the urge to implement a military mindset over the drafting of a new constitution. A top-down approach will be likely to poison the process -- and process is everything in constitution writing.

During the decades of constitutional upheaval, Thailand's civilian political parties remained relatively weak. This changed when billionaire populist Thaksin Shinawatra arrived on the scene about 15 years ago. Shinawatra and his allies played into the rural sense of exclusion from government, allowing them to win elections time and again -- six since 2001. But lacking a deep tradition of democracy, Thaksin's opponents, including the middle-class, urban Yellow Shirts, have been unwilling to accept the results. In fact, the Yellow Shirts' refusal to accept the 2013 election victory of Thaksin's sister, Yingluck Shinawatra, is precisely what sparked the conflict leading to last month's coup.

Thaksin's opponents, for their part, are highly influential among Thailand's strongest institutions -- the bureaucracy, the military, the Buddhist sangha, and, of course, the monarchy. These groups exist and function separately from any constitutional government, and tend to be distrustful of electoral democracy. The result has been a series of weak civilian governments, incapable of preserving themselves when the gulf between majoritarian sentiment and elite interest has become too wide.

Thai constitutions have historically been written rather hastily so as to recover a semblance of normalcy in the wake of a military coup or popular uprising. The 1997 constitution made an admirable attempt to break from that trend. The drafing process involved mass participation and created a new set of institutions aimed at ensuring that elected officials did not abuse their power, including a constitutional court and commissions to fight corruption and protect human rights. But by 2006, many within the Thai elite had come to see that system as ineffective, not least because Thaksin's electoral strength allowed him to wield great influence over these institutions. Following a coup in September 2006, Thaksin fled the country, and the military oversaw the drafting of the 2007 constitution, which watered down some of the perceived excesses of the previous version. They hoped it would serve as happy medium.

One of their revisions, for example, changed the architecture of Thailand's senate, the gatekeeper to high-level government promotions. Military-dominated constitutions tend to have appointed senates, while democratic ones use popular elections to fill those seats. In an attempt to compromise, the military-backed drafters of the 2007 constitution split the difference, establishing a system in which half the senators would be appointed and half elected. Such "compromises" were defined unilaterally, however, based upon the military's own notion of a "fair deal," without having undergone bipartisan dialogue beforehand.

And bipartisan dialogue is exactly Thailand needs to break the vicious cycle. The failure of the 2007 "compromise constitution," clearly illustrates the futility of any attempt to form a viable system merely by tweaking constitutional text. The polarized factions within the country must come together to create a constitution that will be widely seen as representing the whole country. That way, down the line, no party can say that the constitution was drafted according to an enemy's design.

Establishing a productive dialogue will not be an easy task. There are no institutions credible and neutral enough to mediate the deep class and regional divides that cause the country's current political crisis. King Bhumibol has been the supreme arbiter of political conflict for decades, but as his physical power wanes, so too does his ability to step in. The looming monarchical succession also adds a sense of urgency to the current crisis.

The military junta should call together all the major players, including leaders of both the Red and Yellow factions, for a genuine discussion about the principles and institutions that should guide the country going forward. Cases in which the military has successfully played the role of neutral arbiter anywhere are exceedingly rare. That said, the three-month "reconciliation" period recently announced by coup leader General Prayuth Chan-ocha represents good start. (In the photo above, a poster depicts the general as Big Brother from George Orwell's 1984.) But it is not yet clear exactly who will be invited to the table, or how the reconciliation will proceed. For a resolution to be viable in the long term it will require frank dialogue, leading to a bargain that is palatable to both factions. For the discussion to be successful, the negotiators will have to settle on two key issues: 1) how to ensure that both factions respect the democratic process in the future, and 2) how to come to terms as a nation with the political violence of the past few years.

The broad outlines of such a grand bargain are not inconceivable, even now, even if getting both sides to agree may be challenging. It should include a commitment on the part of the reactionary Yellow Shirt partisans to respect electoral results; a constitutional provision prohibiting political amnesties (although the military will almost certainly get a pass); a reconstituted set of accountability institutions; and a strong recommitment to the monarchy. Such a deal would leave Thaksin Shinawatra out of the country, but still allow room for democracy to be respected.

Given the geographic nature of the Red-Yellow divide, Thailand might also benefit from greater decentralization. This would reduce the stakes of controlling the national government, but could also encourage economic development within the poorer regions of the country, ameliorating some of the inequality that has to date fueled the conflict.

And yet, getting to a constitutional agreement will require patience and no small modicum of trust, and trust can be slow in coming. Outside pressures -- including U.S. insistence that the country return to constitutional norms so that bi-national relations can resume -- might incentivize the military to rush the process. Even under the best of circumstances, establishing rapport between foes can take time, and these are hardly the best of circumstances.