UN-business partnership forged on global economy

By Maria Livanos Cattaui

Paris, 6 February 1998 - The way the United Nations regards international business has changed fundamentally. Today, with cold war rivalries fading into history, the UN and other intergovernmental organizations and institutions have to confront the great new challenges of the global economy. They need business to help them.

This shift towards a stance more favourable to business is being nurtured from the very top. As UN Secretary General Kofi Annan has said: "The impact of the private sector is of growing importance. It would be timely to develop means of consultation between the United Nations and the business community"

Nowhere has the sea-change in attitudes been more marked than in the field of international investment. The overwhelming majority of UN governments now see foreign direct investment as a national asset, the source of economic progress and new wealth for their peoples. They vie with one another to persuade companies that their countries offer social stability, the rule of law, and a regulatory framework capable of inspiring investor confidence.

Long gone are the days when governments of what was then known as the Third World used the UN platform to berate multinational corporations as rapacious monsters, interested only in depriving them of their natural assets and draining their national wealth.

This courting of foreign capital and expertise is a sign of the times. The market economy system is everywhere embraced as the most effective means of generating and spreading wealth. But it cannot operate at maximum potential without an efficient regulatory framework that sets the rules of the game.

Those rules once came almost exclusively from national governments, but that is changing fast. As economies become ever more closely enmeshed, the need for strong multilateral rules becomes even more pressing. The emphasis has to shift from national or regional legislation to rules that can be applied globally. For these, business must look to the United Nations and its agencies as well as to other key intergovernmental organizations like the World Trade Organization.

International institutions increasingly turn to business. An example is the "Business Partners for Development" initiative launched at the World Bank to encourage development agencies to involve businesses in their own programmes. As one senior Bank official remarked: "The public sector isn’t hacking it alone any more."

The International Chamber of Commerce, representing business throughout the world, is establishing a systematic dialogue with the United Nations. The purpose of these contacts is to find fruitful areas for cooperation between the UN and business as the main agent for diffusing technology and wealth through trade and investment.

What makes the dialogue possible is the perception by both sides that open markets are a precondition for spreading more widely the benefits of globalization, for integrating developing countries into the world economy, and for improving living standards of all the world’s peoples, and in particular the poor.

One priority area where business can contribute its expertise is to make sure that the global financial system possesses the checks and balances needed to avert East Asia-style financial crises. Another is pursuing economic growth while protecting the environment. Others are trade liberalization, defence of intellectual property rights, the fight against corruption, modernization of customs procedures. The list is long.

The dialogue is coming about not a moment too soon. Globalization has the potential to bring immense benefits to the human race. But – as recent events in East Asia have demonstrated - it can swiftly magnify local crises into problems affecting the entire world economy. Hence the need for a framework of rules on investment, capital markets, competition policy and a host of other areas.

Both governments and business have their responsibilities. As the global economy grows, it will be for governments – particularly in the poorer countries – to find ways at national level to ensure that newly generated wealth benefits all their peoples and not just a privileged few.

The creation of small and medium sized businesses will be the most effective way of spreading genuine wealth as opposed to providing hand-outs. Here business knowhow – communicated perhaps through the chamber of commerce movement worldwide – has a key role to play. Rural infrastructure development, provision of basic health care and education will be essential too, but these are all primarily the responsibility of government.

Finally, it remains for business to provide the enterprise, capital and inventiveness, and to forge the alliances and strike the deals that make the global marketplace a reality.