Aid and Trade

January 25, 2008

I’m sitting in BCLC’s global corporate citizenship seminar on “Exploring the Linkages Between Aid and Trade.” The 20 or so participants include leaders from Abbott, Booz Allen Hamilton, and Creative Associates International, as well as the USAID Global Development Alliance, the U.S. Trade Representative, Millennium Challenge Corporation, and the International Finance Corporation.

We’ve gathered this brain trust this morning to wrestle with questions of how corporate philanthropy and corporate social investments are contributing to global poverty reduction.

The traditional form of corporate global aid focused on gifts (philanthropy). Billions of dollars have been spent, by both the private and public sectors, in underdeveloped countries in the interest of alleviating poverty. As one guest said, a country never got out poverty by cashing aid checks – it just doesn’t happen.

The new trend in global corporate citizenship is based on impact and “investments” in outcomes and rewards. Think of it as economically oriented aid programs that tie social and humanitarian needs with market growth and opportunity.

Priority social investment areas, based on how companies contribute, include healthcare and basic human needs, workforce development and education, disaster response, and climate change. Priorities for trade and economic development hinge on anti-corruption and good governance issues, business literacy, a skilled workforce, a safe community, and good infrastructure.

So how can we better link up those priorities? Multinational companies are hungry for real change and improvement to be tied to their corporate citizenship investments. Some successful examples are noteworthy: Cisco’s networking academies are increasing workforce skills across the developing world, DaimlerChrysler halved the occurrence of HIV-related deaths in its South African workforce, and AmCham Jamaica’s anti-crime initiative decreased murders by 100% in the once crime-stricken area of Grants Pen. There are several other examples.

We’re quickly moving toward an “investor mentality.” To continue this trend, we need to know what others are doing — for example, what is the Millennium Challenge Corporation or the IFC doing and how can companies build off of that? How can BCLC assist with the information sharing and partnership building? And, when should companies expect to see a return on their social investments?

Update:

BCLC’s next step is to better define the intersection of aid and economic growth. We’re thinking about indentifying 2-3 model countries in which we can work with the local government, AmCham, and corporate sector to overcome development and social progress barriers. The analogy going around this table is “boiling the ocean and bringing it back down.” But we’re ready for the challenge.

Stay tuned, because we’ll push out information on our lessons learned over the next year or so. Let us know if you have ideas about how we should focus our efforts.