Since at least the dawn of the 21st century, there has been growing academic interest and practitioner engagement with cross-sector partnerships for development, especially between private businesses and the public sector. I have also been a contributor to this field. Most recently, this includes work on multi-stakeholder collaborations, presented at the CSSI (Cross-sector Social Interactions) conference, and reflections shared as part of Business Fights Poverty’s online conference session on partnerships.
What I’ve learned from these and other events is that the treatment of public-private interactions within the development sphere is often problematic. On the one hand, practice-oriented thinkers prioritise pragmatic questions of design and implementation of collaborations, driven seemingly by instinct rather than clear evidence or strong theoretical underpinning. On the other hand, more theoretical work can feel like it depends on highly questionable assumptions. Methods like ‘political settlement analysis’ or game-theoretical modelling have been used to explain macro-economic outcomes or entire national political orders based on analysis that assumes homogeneous groups of actors single-mindedly pursuing self-interest against narrowly defined goals.
Developing a more nuanced concept of business
As we describe in our recent position paper on state-business relations, the Business, Markets and States cluster at IDS proposes a different agenda. This agenda starts from the recognition that interactions between public and private sectors are dynamic and involve real (rather than archetypal) actors. In this, we have broad sympathy, for example, with Fritz Scharpf’s call for analysing ‘games real actors play’. We need a better understanding of the real-life motives, including but not limited to self-interest, and the institutional and socially constructed incentives that shape decision-making. Achieving development requires a much better understanding of how state-business interactions work in practice, and what conditions enable or impede outcomes such as improved health and nutrition, or decent work.
In order to progress this understanding, we need to develop a deeper and more nuanced concept of business. This understanding should reflect the work of people like Stephan Haggard, Sylvia Maxwell and Ben Ross Schneider, who have elaborated theories of businesses and their engagements with state actors. The way that these interactions are understood changes depending on whether you understand business primarily as a representative of ‘capital’ or as having particular sectoral interests; as part of a collective lobby or as an individual firm; as being composed of company engagements in formal fora or as executives interacting with government officials within their personal, informal networks. Of course, most real-world cases cut across these categories, and should be analysed as such. A further consideration is the level of these interactions – and whether they take place in the global, national or sub-national (e.g. regional or sectoral) arena.
Another way in which we change tack from much of the other work on state-business interactions is with our focus on questions that extend beyond a relatively narrow concern with economic growth and development. The Business, Markets and States cluster is interested in state-business interactions in the SDG era, which is characterised by systemic challenges of an environmental and societal nature, in which the pathways to achieve progressive change are even less clear than in the pursuit of economic growth. Here knowledge exchange and the involvement of others, such as civil society, are likely to matter much more.
Four lessons for development researchers
Cluster members have worked on issues such as national development banks and the green economy, identifying how government action has shaped private microfinance markets and the ways in which development agencies can influence value chain governance through public-private partnerships. While the specific findings of these different research efforts are unique to context, some common learnings do emerge.
First, the ways in which states and businesses engage and influence one another shapes progress towards the SDGs, for better or worse. Through these interactions they can generate a more complete understanding of development challenges, or undermine sustainable development, e.g. through reinforcing assumptions and ideological preferences for certain technological solutions.
Second, state-business relations that aim for growth may fail to produce economic and social development in the broader sense, especially where the benefits to capital and labour dramatically diverge.
Third, the preferences and strategies of states and businesses evolve over time, often influenced through negotiation and interaction. For example, if states and businesses gain confidence that each will follow through on commitments, they are more likely to risk investing in low carbon technologies with short term costs but long-term gains.
Finally, and to reiterate my concern of recent days, the development sphere needs a much better and more nuanced understanding of business. For example, working with big multi-nationals can be effective in some cases, but it is not a silver bullet for delivering development solutions at scale. Tax breaks do not drive new, productive investment, although they may be used to shape investments in useful ways. Market actors are not wholly ‘rational’ or free from ideologies.
Development researchers and actors may be aware of all this, but much of their talk about partnerships and collaborations glosses over it. Both future research on state-business relations and future development practice needs to understand the state and business much more deeply, rather than to simply assume the best or worst of either.
This blog post is part of a series to introduce the Business, Markets and the State (BMAS) research cluster’s Position Papers. To read the position paper on state-business relations, please go here. You can find all the position papers here.
