Analysing the Economics and Politics of State Business Relations in Africa and India
15-17 December, 2009
Emerging Themes and Policy Messages
Giant Sundial, Jaipur. Copyright IPPG.The joint IPPG-CUTS workshop focussed on how best to synthesise messages emerging from IPPG's State Business Relations (SBR) research studies, which cover a number of African countries and Indian states.
Whilst a number of significant differences emerged from the various studies, one constant across the SBR research was the emphasis placed on the importance of SBRs for economic growth: SBRs, whether formal or informal, matter. In his presentation ODI's Dirk Willem te Velde offered his assessment:
The intensity of state business relations have been demonstrated to be beneficial for economic growth.
Examples include the ease of doing business in areas such as regulations, infrastructure, processing of applications etc.
Good SBRs can lead to a "meeting of minds" between government and business in identifying crucial constraints restricting sectoral development, helping to optimise use of scarce resources. They can also soften the impact of informal interactions between (mostly large) businesses and government - especially those associated with socially wasteful collusion and corruption.
His presentation also proposed some criteria designed to determine the effectiveness of SBRs.
When exploring the differences between studies, the focus was on the key questions of what makes effective state business relations, and how effective SBRs and the institutions that shape them can be encouraged. The geographical and thematic variations of the research enabled delegates to explore some of the critical issues. These included:
The impact of SBRs on formal and informal sectors. The latter, by their very nature, are often not represented in SBRs, even when they form the majority of the workforce, as in the West Bengal study.
The importance of business associations to good SBRs (and what happens when they are undermined as with NEDLAC in South Africa).
The voice of small business as a whole is often under-represented, regardless of whether they are involved in formal business associations, as in the Mauritius case study or informal bargaining as in the South African study.
A recurring question across studies was whether SBRs tend to be sector-specific or if best practice in one sector's SBRs is transferable to another.
Although good SBRs encourage economic growth, they are not necessarily pro-poor. IPPG's case study in Zambia is an example of where effective SBRs can have a positive impact - in this case, on budget allocations for pro-poor public spending. However, if SBRs are solely determined by the state and business they will not automatically be supportive of pro-poor growth and may need a "third flank" of civil society to help achieve pro-poor growth.
The need for funders and donors to consider and support SBRs was also considered. SBRs evolve slowly over time, but there are "critical junctures" when investing in SBRs are particularly vital. However, effective SBRs cannot simply be put in place; as in South Africa, they can fail to function when there is no buy-in.
Read the Jaipur workshop report by Purnima Purohit, Assistant Policy Analyst at CUTS CITEE, India.
SBR research studies are now available to download from IPPG's publications page
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