Overview
The debate about good governance and corruption in developing countries has largely focused on donor financing and the impact of donor resources on the public sector. While the public sector and donor funds play a critical role in shaping the governance climate, foreign and domestic investors also play a decisive role in shaping the way decisions are made, transactions are handled, and governance reforms are carried out. The dramatic growth of foreign direct investment over the last decade suggests the influence of the private sector is only set to increase. Yet alliances among developing countries, international donors and the private sector have been relatively unexplored, despite a number of indisputable common concerns.
Developing countries, donors and private sector players face a similar set of governance constraints when engaging in development activities. These problems are particularly acute in the so-called fragile states, where poor governance, corruption, political fragility and the availability of valuable natural resources often combine to do more harm than good. In addition, donor countries and the private sector alike are demanding better analysis of the quality of governance to help track the impact of reforms and to assess investment risk.
The objective of this conference was to explore the potential of a three-way
partnership of donors, developing partner countries, and the private sector to
improve governance and fight corruption. Such a partnership calls not only for
stronger attention to the assistance strategies used by international donors and
strong leadership by developing countries, but also for renewed consideration of
the third leg of the triangle: the reinforcement of a competitive, responsible
private sector. This requires a multifaceted engagement to help developing
country governments improve the investment climate and to help companies to
strengthen ethical corporate practices and corporate citizenship. Such an agenda
will also demand more active engagement by the global private sector to share
lessons learned and to define a better informed policy agenda. It may entail
further sector-level initiatives such as the Extractive Industries Transparency
Initiative or other specific approaches at the industrial level.
Participants at this two-day conference included a wide group of
stakeholders-from international organizations, country partners to private
sector leaders. The aim was to identify policy recommendations that will build
further on work done by the European Union, the World Bank Institute and the
OECD in the area of governance, including follow-up at the Spring Meetings of
the World Bank Group and the International Monetary Fund in April 2007, as well
as at the OECD Council at Ministerial Level in May 2007. The conference also
delineated an agenda for action and explore what steps can be taken both now and
in the near future.
Some Conclusions from the Conference
- Technical support to shape institutions may be less effective than building peer and demand-side pressure. Shifts in donor support may be needed.
- OECD countries need to provide resources to speed the recovery of assets deposited in OECD-based banks.
- Stronger action is needed by OECD countries on the supply side of corruption.
- The private sector needs to bring more big companies into the growing group of companies that are taking a zero tolerance approach to corruption.
- The next generation of leaders, from grammar schools to business schools, has to be brought into the debate.
At the Conference
