DUBAI – The Millennium Development Goals established a successful framework for the world to address fundamental social issues such as poverty, health, hunger, and education. As discussions commence on the shape and scope of the global development agenda that will succeed the MDGs, which expire in 2015, it would be helpful to consider the role of the private sector and rethink the international community’s overall approach to development.
Economic development is the best way – indeed, the only way – to achieve sustainable poverty reduction. It creates a virtuous circle. Growth creates jobs, and jobs reduce poverty.
The private sector has a key role to play. Private-sector capital flows now dwarf traditional public-sector aid flows. For example, of the $200 billion in total US resources dedicated to development in 2010, 87% came from private flows. By contrast, in the 1960’s, official overseas development assistance accounted for 70% of capital flows into developing countries.
A similar picture prevails globally. Domestic resource mobilization, remittances from expatriate workers, private debt and equity flows, and philanthropic contributions exceed official international aid by a wide margin. Private flows are no longer the tail, but the dog that wags the development agenda.