Profit: An Antidote to Poverty
Putting all the benefits of Corporate Social Responsibility aside, my biggest interest in growing the sector is plain and simple to help end poverty.Â Idealistic? Yes.Â But the more time I spend immersed in Development studies the more I realize just how important the role of the private sector is in taking developing countries to the next level.
Itâs not blind trust in the market â though many free market enthusiasts and politicos would sell their soul in its defense.Â That approach has been tried, at great expense, during the years of Structural Adjustment policies in the 80âs.Â As one of my professors recently said, âyou canât emphasize the role of markets when you havenât improved peopleâ s ability to cost share.âÂ The market can only serve as an agent of change if people have the education, skill and resources to make it work.
So addressing poverty through the private sector does not mean standing back and letting it do its thing - though it is about building business, about supporting large-scale industry and manufacturing.Â The activist in me screams (no!) but the academic has to acknowledge that the greatest service that the private sector can offer in fighting poverty is the creation of jobs and the infusion of investment and tax revenue. Donât worry â this doesnât mean thereâs no room for the little man - I quote a 2005 World Development Report saying, âprivate firms â from farmers and micro-entrepreneurs to local manufacturing companies and multinational enterprises â are at the heart of the development process.Â Driven by the quests for profits, they invest in new ideas and new facilities that strengthen the foundation of economic growth and prosperity.Â They provide more than 90% of jobs, creating opportunities for people to apply their talents and improve their situations.Â They provide the goods and services needed to sustain life and improve living standards.Â They are also the main source of tax revenues, contributing to public funding for health, education, and other services.Â Firms are thus critical actors in the quest for growth and poverty reduction.â
This is ultimately where CSR comes in.Â If we grant the corporate sector the task of going forth and developing business in the name of developing nations and poverty eradication, it canât be done with the blind faith of the power of the market as it has been in the past, but with the understanding that universal wealth creation is the result of responsible, socially conscious business practices.Â We need businesses to have profit at heart to maximize what they can ultimately contribute through their operations, but with the joint understanding that it is for the benefit of the community at large, and never at its expense.
To this end, a past point weâve discussed recognizes that none of this is possible without a strong policy framework and government partnership, âIt is obvious that without a conducive investment climate, the private sector in developing countries will no doubt under perform and will not have a significant effect on poverty alleviation.âÂ As the author of this journal article recognizes, the public private effort to address poverty is entirely symbiotic â with the private sector serving as the engine of growth and the government or state serving as the facilitator/developer of the enabling environment.
Hand in hand, a balance of profit and potential for all.
All quotes from this journal article.