Many people assume that foreign aid from governments and international bodies is the key driver of economic growth and modernization in much of the developing world. In fact, direct investment by corporations is greater, and increasingly is helping to fill the gap created by declining foreign aid.
The 34-nation Organization for Economic Cooperation and Development (OECD) reports that its Assistance Committee distributed $125.6 billion in foreign assistance to developing nations in 2012 -- down from a peak of $128.5 billion in 2010. The United Nations 2013 World Investment Report cites $637 billion in direct foreign investment in developing nations in 2010, and $735 billion in 2011.
Corporations are profit-driven, while governments distribute foreign aid both for humanitarian and foreign policy reasons. When conditions in a nation worsen – such as during times of conflict or natural disasters – foreign aid often rises while corporate investment declines due to perceived risk. But corporations have shown that earning profits and helping societies develop are not mutually exclusive activities. Every day, corporations exercise social responsibility, demonstrating that they can serve both their business goals and the public interest…
… James Stavridis, who became dean of the Fletcher School of Law and Diplomacy at Tufts University in July following his retirement as a U.S. Navy admiral and his final military tour as the NATO supreme allied commander in Europe, has a reputation for successfully building bridges connecting the public and private sectors around the world as a way to strengthen both security and development. Stavridis advocates “smart power” – the creation of durable partnerships with friends and allies to achieve mutual goals of security, prosperity and peace. He helped develop public-private partnerships that have enabled the U.S. government to work with businesses and non-profits to promote economic development and enable humanitarian assistance as foundations of greater security. Such partnerships enable the government to harness non-governmental expertise to increase the effectiveness of assistance programs.
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