Most foreign policies today are ought to be economic policies. Business is an indispensable partner of today’s diplomacy.
So it would be in the interest of both to promote the rule of law, transparency, and respect for human rights as well as encourage economic development, to grow and prosper.
Businesses need governmental support in terms of permissions and regulations, if it has to succeed without any roadblocks. But a government also needs businesses if it truly wants to succeed in achieving sustainable economic growth and development. It is based on the simple fact that more than one-third of the 100 largest economic actors today are private companies, not countries. When comparing the 2011 gross domestic product (GDP) of countries to the gross revenue of multinational enterprises, ExxonMobil and Wal-Mart would be the 28th and 31st largest economies in the world, out-sizing the economies of Nigeria, Sweden, and Venezuela.
In an era of shrinking public budgets and diplomacy in the age of scarcity, the idea that business, on the one hand, and government, on the other, can simply operate in parallel worlds is simply not viable. I was recently reading the remarks of Jose W. Fernandez, Assistant Secretary, Bureau of Economic and Business Affairs, France on corporate social responsibility (CSR) where he talked about potential partnerships between government and companies that can meet some of these challenges.
The foreign policy and economic policy of countries have always been indivisible. Whether it is access to resources or increased trade, economics has played a role in diplomacy since time immemorial. Whether developed or developing, most of the emerging countries recognise this. It is also clearly visible from the fact that today when the president or the prime minister of any country gets off the plane in a foreign land, they have CEOs of their largest companies with them. The success of their foreign trips is measured not only by the treaties they execute, but by the deals the private companies sign.
Today, as we seek to promote regional stability or deal with global warming, it is clear that the private sector is a necessary partner. We need to look no further than recent events in North Africa. High rates of unemployment, particularly among youth, had a significant impact on social cohesion and political stability, and when you put that together with an anemic private sector that can’t generate opportunity because it’s been suffocated by government intervention, you end up with a combustible mix. The lesson here is that both government and the private sector must work together to foster sustainable and inclusive economic growth.
But, companies do more than just create jobs. They bring new skills, technologies, and ideas, and they reflect their origins.
Corporate Social Responsibility
For many, the idea of CSR simply means the good of companies – planting trees, setting up schools, or providing food and water during times of crisis. Those are all positive activities that demonstrate good corporate citizenship.
But CSR refers to more than just philanthropy. It also means responsible conduct in all of a company’s operations and business practices.
Companies operate in a global context and in many ways, a global “fishbowl.” The actions companies take directly, as well as those of their affiliates and suppliers, are frequently visible and can be closely scrutinised. Scrutiny, in turn, can lead to changes in consumer behavior or investor expectations.
Companies have a financial incentive to conduct their operations in line with the expectations of their consumers and broader stakeholders. Respect for human and labor rights, sound environmental practices and respect for the rule of law should permeate every tier of a company’s operations in its home country and beyond. If this is enforced or brought onto the table while forging contracts between countries on such diplomatic visits, it can be instilled ground up.
The fact of the matter is that just like business can be a force for good; it can also exacerbate some of capitalism’s greatest excesses. I firmly believe that companies can do well by doing good. They can be leaders and drivers of change. Government, business, and civil society must combine their resources and expertise to make sure that for the community development and growth.
(The article is inspired from the remarks of Jose W. Fernandez, Assistant Secretary, Bureau of Economic and Business Affairs shared by US Department of State)
The thoughts and opinions shared here are of the author.
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