By Lincoln P. Bloomfield, Jr.  – 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.  

A great deal of corporate investment and innovation today is focused on finding new and better ways of transmitting the spoken word, text and video on the information superhighway. This has enormous potential to accelerate economic development in parts of the world with the greatest needs.

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This op-ed was first published in International Business Times on Nov. 19, 2013

Photo courtesy of Global Partnership for Education via Flickr