Corporate Investments Can Help Accelerate Economic Growth In The Developing World
WASHINGTON – 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.
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