We’d love to see the same thing happen here in the U.S. - take economic development dollars and invest in small businesses. It’s not happening at any scale, yet has big bang for the buck.
Wait, why do we think business can replace the role of governments? Do we really think a private company - of any size - can do basic WASH, healthcare, or education better than municipal water, sanitation, hospitals or schools? If so, please point out the developed country that has succeeded at scale with a private sector approach.
Let’s stop mythologizing private sector and accept that we have and need government for public goods. That’s why their called public goods, after all.
Let me clarify - traditional economic development strategy has been to give tax breaks and other incentives to attract big business. Louise Story of NYTImes did a great investigative report a couple of years ago on the $80 billion given away by states to attract a call center, manufacturing facility, etc… most of the time with no accountability on jobs. And that’s just a floor - doesn’t include local giveaways.
What I’d like to see happen is to take 50% (hell, take 5% and put the rest of that to WASH - save it -do what you will) of that money and help with local business development in under-resourced communities. Help them write business plans, access capital and markets. The best scenario is that they’re in business 5 years from now and have hired two employees (paying decent wages) and the worst scenario is that they become better employees - at a cost effective price of $3K for job.
This is a very healthy discussion, there is huge interest now within the international development community on the role of business in development, including how business can contribute to achievement of the Millennium Development Goals or to a new post-2015 development framework. Often, this debate is framed in terms of how governments or international bodies should stop businesses doing bad things through regulation, standard setting, or transparency initiatives. Or, alternatively, in terms of how businesses could improve their impact through partnerships with donors or governments. These discussions are valid but tend to lose sight of the fact that it is businesses, not the U.N. or government departments, that actually generate development: creating jobs, buying goods and services from poor people, generating government revenues, manufacturing medicines, building roads. The development community should perhaps approach the issue of private-sector engagement with heightened realism and humility. Don’t ask what business can do for your development agenda. Ask instead what your agenda can do for business.
Businesses that receive business development services (business plans, marketing, mini-MBAs), access to small amounts capital and connections to markets are more successful than businesses that don’t receive help.
In the US microbusinesses (fewer than 5 employees) created a net 7 million jobs while large companies 500 employees or more) lost 3/4 million jobs from 2003-2012. Imagine what we could do to the wealth gap and local economies if we focused our economic development dollars (as defined above) on smaller businesses rather than giveaways to large companies.
If there’s anyone out there who wants to help us champion this cause, let me know .(JavaScript must be enabled to view this email address)!
Heidi, Thank you for your comments and the links to your work at Microbiz. It’s great to see your focus on local job creation and local leadership. From my perspective both are key to ensuring sustainable economic growth. I enjoyed reading your brief and hope you continue to do good work to support small business in the United States.
Paul, I appreciate your point about coming to the table open and humble to negotiate. I am hopeful that the private, public, and civil society organizations will continue to leverage each other’s core competencies and work better together than they would alone. I’m eager to see what comes out of Addis Ababa, Ethiopia and the discussions about redefining finance for the sustainable development goals. I hope those attending come with that same willingness to listen and compromise that you allude to in your comment. It requires humility and pragmatism to do things differently in development.
Wayan, It is good to have sceptics chime in on the often overhyped role of the “private sector.” While I appreciate your perspective, this article does not suggest that we replace governments, but rather that more can be done to empower local entrepreneurs to solve local problems. This is an often underutilized solution for development agencies and an approach that is quite different than a top-down government mandated approach. Yet ultimately it requires supportive government policies and regulations to succeed. If we consider the needs of the youth unemployment crisis in Africa as described here by the World Bank for instance, it is not feasible for governments alone to solve the problem. Support for entrepreneurial ecosystem to drive job creation will be key.
Interesting thoughts Randall and Kate. Perhaps more lobbying for governments and businesses to provide funding would help too, presenting evidence of the benefits would be a good selling point.
COMMENTS
BY Heidi Pickman
ON July 2, 2015 02:18 PM
We’d love to see the same thing happen here in the U.S. - take economic development dollars and invest in small businesses. It’s not happening at any scale, yet has big bang for the buck.
BY wayan
ON July 3, 2015 05:22 PM
Wait, why do we think business can replace the role of governments? Do we really think a private company - of any size - can do basic WASH, healthcare, or education better than municipal water, sanitation, hospitals or schools? If so, please point out the developed country that has succeeded at scale with a private sector approach.
Let’s stop mythologizing private sector and accept that we have and need government for public goods. That’s why their called public goods, after all.
BY Heidi Pickman
ON July 6, 2015 09:29 AM
Let me clarify - traditional economic development strategy has been to give tax breaks and other incentives to attract big business. Louise Story of NYTImes did a great investigative report a couple of years ago on the $80 billion given away by states to attract a call center, manufacturing facility, etc… most of the time with no accountability on jobs. And that’s just a floor - doesn’t include local giveaways.
http://www.nytimes.com/interactive/2012/12/01/us/government-incentives.html
What I’d like to see happen is to take 50% (hell, take 5% and put the rest of that to WASH - save it -do what you will) of that money and help with local business development in under-resourced communities. Help them write business plans, access capital and markets. The best scenario is that they’re in business 5 years from now and have hired two employees (paying decent wages) and the worst scenario is that they become better employees - at a cost effective price of $3K for job.
http://www.microbiz.org/wp-content/uploads/2014/03/DIY-Article-in-EDJ_Winter14.pdf
BY paul
ON July 7, 2015 03:15 AM
This is a very healthy discussion, there is huge interest now within the international development community on the role of business in development, including how business can contribute to achievement of the Millennium Development Goals or to a new post-2015 development framework. Often, this debate is framed in terms of how governments or international bodies should stop businesses doing bad things through regulation, standard setting, or transparency initiatives. Or, alternatively, in terms of how businesses could improve their impact through partnerships with donors or governments. These discussions are valid but tend to lose sight of the fact that it is businesses, not the U.N. or government departments, that actually generate development: creating jobs, buying goods and services from poor people, generating government revenues, manufacturing medicines, building roads. The development community should perhaps approach the issue of private-sector engagement with heightened realism and humility. Don’t ask what business can do for your development agenda. Ask instead what your agenda can do for business.
BY Heidi Pickman
ON July 7, 2015 11:21 AM
Businesses that receive business development services (business plans, marketing, mini-MBAs), access to small amounts capital and connections to markets are more successful than businesses that don’t receive help.
In the US microbusinesses (fewer than 5 employees) created a net 7 million jobs while large companies 500 employees or more) lost 3/4 million jobs from 2003-2012. Imagine what we could do to the wealth gap and local economies if we focused our economic development dollars (as defined above) on smaller businesses rather than giveaways to large companies.
If there’s anyone out there who wants to help us champion this cause, let me know .(JavaScript must be enabled to view this email address)!
BY Kate McElligott
ON July 14, 2015 06:31 AM
Heidi, Thank you for your comments and the links to your work at Microbiz. It’s great to see your focus on local job creation and local leadership. From my perspective both are key to ensuring sustainable economic growth. I enjoyed reading your brief and hope you continue to do good work to support small business in the United States.
Paul, I appreciate your point about coming to the table open and humble to negotiate. I am hopeful that the private, public, and civil society organizations will continue to leverage each other’s core competencies and work better together than they would alone. I’m eager to see what comes out of Addis Ababa, Ethiopia and the discussions about redefining finance for the sustainable development goals. I hope those attending come with that same willingness to listen and compromise that you allude to in your comment. It requires humility and pragmatism to do things differently in development.
Wayan, It is good to have sceptics chime in on the often overhyped role of the “private sector.” While I appreciate your perspective, this article does not suggest that we replace governments, but rather that more can be done to empower local entrepreneurs to solve local problems. This is an often underutilized solution for development agencies and an approach that is quite different than a top-down government mandated approach. Yet ultimately it requires supportive government policies and regulations to succeed. If we consider the needs of the youth unemployment crisis in Africa as described here by the World Bank for instance, it is not feasible for governments alone to solve the problem. Support for entrepreneurial ecosystem to drive job creation will be key.
BY Samantha Reede
ON June 19, 2018 05:25 AM
Great Post! Yes, IT supporting is a big option for Small Businesses. I have got valuable information in this post as I want. Thanks for sharing.
BY Jake
ON February 23, 2019 04:22 AM
Interesting thoughts Randall and Kate. Perhaps more lobbying for governments and businesses to provide funding would help too, presenting evidence of the benefits would be a good selling point.