Antidote

So Dambisa Moyo is in London talking about her new book on resources – Winner Take All – which has been getting lots of attention. I enjoyed meeting Dambisa a few weeks ago, when we were pulling together perspectives for our 11 Conversations work. She talked about business and it’s role in development – particularly jobs, skills and trade.

Here’s the Q&A we published in the Brunswick Review, together with an interview with Bob Zoellick, head of the World Bank.

Thinking about the big challenges facing the global economy today, what is the role that business can play?

I think we’ve forgotten that the most important thing businesses can do is create jobs. To me that is the central conversation we should be having. There are 81m young people out of work around the world between the ages of 18 and 25. Look at the unemployment rates around the world right now, whether it’s the United States hovering above 8 per cent, or Europe, in some countries, at around 20 per cent. What better value can companies add than to create jobs? For example, I’m on the board of a major brewer, and I see that in a country like Uganda there are about 30,000 farmers growing crops that we purchase. It is the most important discussion: how we are going to create jobs and how we are going to address income inequality and help people who are desperate to lead productive lives but are finding it difficult to find employment. How can we actually work with businesses so that they can increase employment?

Nobody would argue that creating jobs is not a priority – but exactly how should businesses be doing this in the developing world?

I am from Zambia, one of the largest copper producers in the world, heavily mineral- dependent. But to benefit from these minerals, you need skills and capital. You need money and you need people with the expertise. We have a great mineral endowment, but we do not have enough Zambian engineers to figure out how to extract the copper. Even if we did have those Zambian engineers, we need money. We need to buy the machinery to convert the raw mineral into copper wire to be able to export it. This is a very practical expertise that the mining business can bring to Zambia, but the same principle applies across the board, whether it is in financial services, consumer goods, or telecommunications. Companies should, and do, invest and provide capital and skills in order to create jobs in this country and around the world, and that really is super-essential.

What do you make of the wave of anti-corporate sentiment we have seen in the past year?

People have lost sight of the value of business specifically and of the capitalist model in general. It is a cycle of negativity. If you look at President Obama’s inaugural speech in 2008, he was very clear. To paraphrase, he said that capitalism has been the best system of delivering economic growth, creating jobs, and reducing poverty. There is no better system. We have more than 300 years of evidence around it. Is capitalism perfect? No, of course it is not. Is there a role for government? Absolutely. But we have forgotten the lessons learned. Whatever successes we are seeing in the emerging world, almost invariably they are mimicking the success story of Europe and the US in years past – I say that because these Western countries have definitely lost their way. If they really go back and look at what sparked the industrial revolution, what actually created these economies over the last 300 years of success, they will see this is exactly what China is doing, what India is doing.

You say there’s a role for government – what do you think it is?

I see three broad roles for government. The first role is to provide basic infrastructure and services – things such as roads, education and national security. These are public goods that we all need but are unable or unwilling to pay for ourselves. The second role is to provide a clear and efficient regulatory structure. Regulations should prevent and punish illegal activity and step in when necessary to correct market failures. The third role is to create a policy environment that incentivizes good behavior. For example, government needs to provide the incentives for people and for businesses to innovate, from discovering penicillin and electricity, to creating the next Google. In How The West Was Lost, I spend a lot of time talking about incentives, because this is what the West has done best.

The global economy is based on economic growth – but can we grow in a way that is sustainable?

There are going to be 9bn people on the planet in 2050. Economic growth means that in 2030 there are going to be 3bn new people in the middle class. There is simply not enough water, not enough arable land, not enough energy and minerals to support living standards the way that Westerners live today. Yet that is what everybody is aspiring to. There are more than 20 wars raging on the planet today with their roots in commodities, and many more are likely to come. It is barely even on the multilateral agenda, and to the extend that it is being added, countries are really responding unilaterally – whether it is America in Iraq or China striking commodity deals. I find it surprising that there is no single global body focusing solely on commodities. It is the one thing that affects everybody.

What about the role of financial markets in sustainable growth?

A major challenge for governments and businesses is to promote economic growth that is also socially responsible and environmentally sustainable. There are already many exciting and innovative businesses that have adopted sustainability as a cornerstone of their business model, but these businesses need capital. By helping to finance these companies, lending to small and medium businesses, and maintaining open credit channels, financial markets can play a huge role in driving growth. If liquidity and capital requirements become too stringent, this is less likely to happen. There is the ever-present question: will the financial services industry be willing to allocate capital preferentially to those businesses that can drive growth? Ultimately it’s not just about discussing bankers’ bonuses: there are much more fundamental issues at stake.

Image of Dambisa source.