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Trade not aid

Economic growth, not aid, is the answer to third world poverty and disease, according to the CBI

The government is failing to recognise the contribution that business can
make to the development of the third world, according to the Confederation of
British Industry in its response to a white paper produced by the Department for
International Development.

The paper, entitled
governance work for the poor
, focuses on managing Britain’s aid to poorer
countries. It proposes new policies relating to global governance, corruption,
health, education and climate change, as well as poverty.

These issues were discussed at last year’s G8 summit at Gleneagles and the
follow-up is the white paper on the ways businesses and the country as a whole
can hit targets and keep promises made at the summit.

In 1999, G8 leaders realised that they were not going to meet the targets
that they had originally set themselves to tackle world poverty and corruption.
Instead, they established a set of eight international millennium development
goals (IMDGs). These included:

  • Reducing by half the number of people in extreme poverty;
  • Combating the spread of HIV/AIDS, malaria and other diseases; and
  • Developing a global partnership for development, including an open trading
    and financial system that is rule-based and includes a commitment to good
    governance and poverty reduction, as well as tariff- and quota-free access to

Set in motion

The purpose of the white paper is to get the ball rolling on the IMDGs. But
John Cridland, deputy director general at the CBI, says, “It fails to fully
explore how aid and trade can work together to alleviate poverty.” The CBI
believes that there is no recognition that businesses can help deliver more than
aid through corporate social responsibility (CSR), for example. Cridland added:
“Some of the greatest reductions in poverty have taken place in China and In
dia, delivered principally through economic growth, not aid.”

One major problem in doing business in some of the poorer countries is
corruption. The government hopes to tackle this by setting up a dedicated
overseas corruption unit to investigate bribery and money laundering in
countries that don’t have the resources to pursue such allegations themselves.

Another way to tackle corruption is through the enforcement of UK laws
against people caught for corruption, and by returning seized assets to the
country in question.

But “businesses can deliver huge benefits beyond their legal requirement”
explains Bryan Cress, senior advisor on CSR and globalisation policy at the CBI.
“The aid donors need to ensure that companies and the government’s activities
are a coordinated effort.”

A good platform for this could be CSR programmes, which companies have no
legal requirement to implement. But will finance directors see the financial
benefits in taking on the task of global governance? According to Cress it is “a
sort of investment in people that pays a dividend that you cannot quantify”.

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