Summary: Joint Session between the Working Group on Civil Society – Private Sector Relations and the Working Group on Human Development

Private sector and development

The Joint Session between the Working Groups on Private Sector Relations and Human Development brought up surprisingly few controversial issues. The speakers agreed on the importance of the private sector, yet each one of them emphasized a unique issue. 

Mr. Bruno Gurtner, representative of the Swiss Coalition of NGOs, stressed the impact that small to medium-sized enterprises have on the development of economies. Mr. Martin Epp of Helvetas talked about the importance of decentralizing decision-making and financial power. Mr. Michel Celi Vegas of Centre d'Echanges et de Cooperation pour l'Amerique Latine (CECAL), emphasized the formation of a civil society and cultural change within that society as intrinsic elements of a country's economic transformation. Ms. Lorraine Ruffing of the United Nations Conference on Trade and Development (UNCTAD) declared that corporate social responsibility is the basis of all sustainable economic development. She called for monitoring and standardized reporting in order to verify corporate social responsibility—something the business world is strongly opposed to.

Importance of small to medium-sized enterprises for the development of economies
For Mr. Gurtner, the role that the private sector, both foreign and domestic, plays in the development of a country's economy is essential. He outlined briefly the Monterrey consensus on the development partnership, which is based on a mutual responsibility between developed and developing countries and the cooperation of their public, private and civil sectors.

Mr. Gurtner mentioned the role that Foreign Direct Investment (FDI) plays in developing countries. To assure the durability and positive impact of these investments, Mr. Gurtner stressed that social and environmental standards must be respected.. According to Mr. Gurtner, the impact of FDI is limited by its national and regional concentration. He grants more importance to the mobilization of domestic financial resources and improvement of market access to promote small and medium-sized enterprises (SMEs) within developing countries, as they provide about 80% of all jobs. Mr. Gurtner named some of the problems facing SMEs in developing countries, such as poor policies and institutions, trade barriers, and the lack of financing, and he stressed the role that governments have to play in overcoming these problems.

Mr. Gurtner also talked about the importance of the public-private partnership (PPP) in its different forms, particularly commercial or institutional cooperation for strengthening infrastructure. The main concerns are access to water, promotion of health and education, transportation, and communication. According to Mr. Gurtner, the risks of PPPs, such as corruption and the lack of organizational mechanisms, can be overcome by the establishment of standards and codes, technical assistance and capacity building, transparency, and the participation of civil society.

Mr. Epp named the strengthening of the private sector as one of the most important assets to a growing economy. To disseminate the 'big money', he suggested the decentralization of financial and decision-making power.

Mr. Michel Celi Vegas, representing CECAL, also declared the importance of the private sector and listed a few advantages, one of them being the opportunity to form commercial, industrial and technological partnerships. Yet, he stressed the role that civil society plays in the development of a country. Mr. Vegas agreed with Mr. Epp on the importance of decentralization and the involvement of the local population, which results in financial aid for more enterprises, especially in rural zones. He also declared that the improvement of national institutions in developing countries was necessary to guarantee the stability of a developing market and to effect a 'cultural' change concerning society’s attitude towards the economy. For him, it is clear that international organizations and governments have a joint responsibility in the development of both the private sector and civil society.

Ms. Lorraine Ruffing from UNCTAD stressed corporate social responsibility in the context of the private sector and foreign investment. She believes that FDI has to be selective but not discriminatory, and that it must allow SMEs access to financial capital. Ms. Ruffing stated that SMEs could benefit from cooperating with transnational companies (TNCs), working together as part of a bigger network. She noted that not only foreign investors, but also governments have to establish a strategies for encouraging ethical foreign investment —in this case targeting investors with positive corporate philosophies. These should include the delegation of power to local managers to develop local linkages. As an example, Ms. Ruffing named the 'tiger states' of Asia that have used international cooperation to strengthen their local sectors. She added that the risks of TNC-SME cooperation for developing countries include dependence on one TNC customer, and the low-cost markets sought by these companies, which hinder long-term prosperity.

Interesting questions
After the presentations, some interesting questions were raised. One delegate pointed out that 'cultural development' was a very relative notion. In response, Mr. Vegas explained that he had used the term with an economic connotation. Another delegate asked how corruption in developing countries could be overcome, as recent events have shown a lack of integrity in the North American economic system. He added that he was wondering why a project concerning this problem, the creation of a 'code of conduct' to avoid corruption, had been halted in 1992.

Presenters' Documents Available

15.09_celi_vegas_michel.doc (20 K)
15.09_epp_martin_(long_version).ppt (237 K)
15.09_epp_martin_(short_version).ppt (193 K)
15.09_gurtner_bruno.ppt (264 K)
15.09_vegas_michel_celi.ppt (186 K)

Click here for all available presenters' documents
Click here for all available summaries

Please read about the summaries