Editor’s Note: Homi Kharas’ policy brief on the private sector and its role in ending global poverty is the subject of this first of six blog posts, from Laurence Chandy and George Ingram, previewing the 2013 Brookings Blum Roundtable.
This Sunday marks the start of the 10th Brookings Blum Roundtable—an annual forum where global leaders, entrepreneurs, practitioners and public intellectuals come together to discuss solutions to end the scourge of global poverty. This year our discussion will focus on the private sector and how its role in supporting global development is expected to change over the next generation.
As part of our preparation for the roundtable, we commissioned a series of policy briefs by leading thinkers and practitioners. Each brief corresponds to a particular roundtable session. These briefs serve as a point of departure for the discussion and tee up the key questions that our roundtable seeks to address. In an effort to make the content of the roundtable more accessible to the public, we are publishing draft versions of the policy briefs online.
The first brief is written by our colleague Homi Kharas, who recently served as lead author of the report of the U.N. Secretary General’s High-Level Panel on the post-2015 development agenda. As part of its deliberations, the Panel consulted with CEOs of 250 companies, located across 30 countries and which together command annual revenues of $8 trillion, to determine the willingness and capacity of the private sector to take on greater responsibilities in driving sustainable development.
Drawing on this experience, Homi submits that the constraints to an enhanced role for the private sector are twofold: Companies lack effective models of both what to do and how to engage in partnerships with the public sector. He argues that the rewards of lifting these constraints are potentially massive in terms of mobilizing private finance to support development goals, unleashing innovation and raising standards of private sector accountability. Among his recommendations are the adoption of leverage targets by aid agencies to encourage more proactive engagement with the private sector, and a reset on the treatment of subsidies and patents to rebalance the incentives for innovation and dissemination of development solutions.
I think blended finance, development finance, is what’s needed, is the future. The U.S. is using a model that was created 40 years ago and I think it’s way past time for modernizing our capabilities.