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A dynamic and competitive private sector is vital for promoting
sustainable economic growth in developing countries. The present era of
globalisation implies that the opportunities for developing countries to
stimulate and develop a private sector that combines both
competitiveness and sustainability is increasingly influenced by
international trends. International agreements on trade and investment,
labour rights and environmental protection shape the extent to which
developing country governments can regulate local industries. In
addition, development assistance from industrialised countries and
international organisations, such as the World Bank, the UN and the
OECD, often includes funds earmarked for stimulating the local private
sector, including Small and Medium sized Enterprises (SMEs).
Globalisation also means that the competitiveness and sustainability
of the private sector in many developing countries is increasingly
influenced by, or even dependent upon, foreign direct investment (FDI)
by multinational enterprises (MNEs). As key actors in the management of
global supply chains, MNEs have come to play a leading role in
restructuring the local private sector, with important implications for
technology development, competitiveness, employment, labour conditions
and the local environmental and health situation.
Foreign companies, large or small, can be crucial partners in
supporting local development, in cooperation with domestic firms,
stakeholders, government agencies and international organisations.
Recognition of this role has led to a reassessment of international
development assistance and the contribution of the different parties in
promoting sustainable economic growth in such a way that this becomes
locally embedded and ‘owned’.
While the necessity of the private sector for promoting economic
growth is largely uncontested, its role in furthering sustainability
lies under scrutiny. MNEs are especially criticized by non-governmental
organizations (NGOs) for their alleged negative impact on sustainable
development and the well-being of the population in developing
countries. MNEs have responded to pressures from consumers, investors,
legislators and other stakeholders by drawing up codes of conduct,
developing sustainability reporting and accountability practices, and
adopting procedures for monitoring and compliance.
These voluntary activities have the advantage that they can be
developed and undertaken in accordance with firms' specific
requirements. On the other hand, implementation and especially the lack
of controllability are major weaknesses of self-regulation, raising
questions about effectiveness. In developing economies, cooperation
between MNEs and local civil society organisations often offers the only
possibility for companies to deal with corporate social responsibility
(CSR) dilemmas in a fundamental and credible way. Therefore NGOs do not
only act as the watchdogs of CSR in international business, but also
play a key proactive role in the quest for solutions to CSR dilemmas.
In the current global context, it is vital to have a good
understanding of the role of the private sector and of civil society
partnerships in sustainable development, the conditions for private
sector development, the impact of globalisation on developing countries
and the way in which governments – both from developing and
industrialised countries – can enhance the sustainability and
competitiveness of local business to achieve higher levels of
development.
Knowledge of these aspects is often scattered and provides little
insight in the strategies and structures of the key actors involved: the
firms, and on how these strategies affect the firms’ interactions with
governments, international organisations, NGOs and other stakeholders,
both locally and internationally. It is precisely in these fields that
the Expert Centre for Sustainable Business and Development Cooperation
brings together extensive knowledge.
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