OP-ED
What a U.N. Partnership with
Big Business Could Accomplish
Published: February 21, 2007
Authors: George C. Lodge and Craig Wilson
If the world's large corporations really are
the greatest drivers of wealth creation, it only
seems reasonable that their capabilities and
resources can be focused on global poverty,
says professor emeritus George C. Lodge.
Here's the case for a partnership between
business, the United Nations, and NGOs. Key
concepts include:
• More than a trillion dollars has been spent
since WWII to alleviate poverty, with
marginal success. But the goal of poverty
reduction will not be reached unless the
world tries something new.
• Countries most successful in reducing
poverty have focused on creating profitable
businesses. They provide the jobs, income,
and motivation for education and individual
development that raise standards of living.
• Multinational corporations can play a key
role by connecting local businesses to world
markets, credit, and technology.
• A nonprofit World Development
Corporation could be formed to identify and
design profitable projects in poor countries
in which teams of multinationals would
collaborate with local partners.
As Ban Ki-moon begins his tenure as
secretary-general of the United Nations, the
world's poor continue to cry out for help and
hope.
One-sixth of the world's population lives in
"deep poverty"—generally defined as surviving
on half or less of the annual income of those at
a nation's poverty line. And yet, more than a
trillion dollars has been spent by bilateral and
multilateral organizations since World War II to
try to alleviate this problem.
The funds that were supposed to help
improve people's lives have often been lost to
governments that lack either the desire or the
ability to reduce poverty within their borders.
Several years ago, world leaders gathered in
Monterrey, Mexico, and gave poverty reduction
top priority. They committed themselves to
halve the number of people living on less than
$1 a day by 2015. They realized that poverty is
the seedbed of terrorism and the spur to
migrants hammering at the gates of Europe and
America.
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But the goal of poverty reduction will not be
reached unless the world tries something new. This concept offers
It is clear from the experience of countries
that have been most successful in reducing multinationals a
poverty—Japan, China, Singapore, South mechanism to do well with
Korea, and Botswana, for instance—that the
creation of profitable businesses is the key. minimum risk and
They provide the jobs, income, and motivation
for education and individual development that
maximum efficiency.
raise standards of living.
In its early stages, a typical project would
Small- and medium-sized domestic
have to be commercially oriented and driven by
operations have created most of the jobs. But
private funds, though public funding from
globalization has meant that for a local business
development banks or foreign aid agencies
to flourish, it must invariably be connected to
would help.
world markets, credit, and technology. That's
The development corporation could proceed
why multinational corporations must play a
experimentally with a small staff, focusing
critical role.
specifically on those countries or regions that
have received little or no direct foreign
The goal of poverty investment. It would bridge the gap that now
reduction will not be exists between multinationals and other
development agencies, as well as facilitate
reached unless the world cooperation between these business and NGOs.
tries something new.
The case for corporate
If the world's large corporations really are
the greatest drivers of wealth creation, there
support
There are many reasons why far-sighted
needs to be a way to bring their capabilities and
executives should be interested in supporting
resources to those countries and regions where
the concept of a World Development
they are now absent.
Corporation.
It is also essential to minimize the risk,
The idea that corporate legitimacy stems
make their investment profitable, channel it so
from the satisfaction of shareholders and
that it has a maximum impact on poverty, and
competition to serve consumer desires is now
make it legitimate in the eyes of the world.
insufficient. Fulfillment of community needs
Here's where Ban and the United Nations
such as clean air and human rights is every bit
can play a part.
as important.
To leverage the multinationals' power and
This concept offers multinationals a
reach, we propose establishing a World
mechanism to do well with minimum risk and
Development Corporation that would be formed
maximum efficiency. It also provides them with
and managed by a partnership of these
a means to improve political stability in
corporations in cooperation with
potentially volatile territories.
nongovernmental organizations and the United
The prospect of Chevron Texaco's
Nations.
multimillion dollar investment in Kazakhstan,
This development corporation would be
for example, is threatened by poverty in that
nonprofit, but its task would be to identify and
country's rural areas. A World Development
design profitable projects in poor countries in
Corporation project to rehabilitate agriculture
which teams of multinationals would
after the collapse of the Soviet-subsidized
collaborate with local partners.
collectives would help build stability by raising
incomes and giving people a stake in a more
promising future.
Our research also shows that many
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multinationals find that their activities in
regions struck by poverty act as powerful
magnets for attracting bright young managers.
Finally, these types of projects would offer
businesses access to local partners and
opportunities in developing nations that could
benefit their future activities.
There is growing evidence that companies
that have innovated to ensure effective
environmental safeguards, greater
eco-efficiency, better organizational health and
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safety, and improved cultural protections have
benefited from better political support and
higher profits. The same will be true of
companies that play an explicit role in the
alleviation of poverty.
Creating a World Development Corporation
will contribute greatly to making that happen.
About the authors
George Lodge, a professor emeritus at
Harvard Business School, and Craig Wilson,
Executive Director, the Foundation for
Development Corporation, Australia, are
coauthors of A Corporate Solution to Global
Poverty: How Multinationals Can Help the
Poor and Invigorate Their Own Legitimacy
(Princeton University Press).
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