“Doing Good and Being Well: Business, War, Climate and Politics” with Rory Stewart, OBE

This is “everything that is wrong about how we think about international development,” said Rory Stewart, British MP and former Secretary of State for International Development. 

Stewart was referencing a conventional, economics focused model of international development, one involving grants, debt, equity investment, and insurance instruments, that was so complexly diagrammed, it looked like a well-intentioned bowl of spaghetti. 

To a full audience in the auditorium at the MacMillan Center on September 17, Stewart proposed a new approach to international development, one that involves the use of nuanced and contextualized solutions, instead of purely economy-focused instruments, that prioritize the improved quality of human lives over simply an increased GDP.  (view lecture)

This is not the first time Stewart has rejected conventionalism in favor of what he believes is right. Elected as a conservative politician, Stewart was stripped of the conservative whip after he and twenty other MPs voted against “no-deal Brexit.” A “no-deal Brexit” would mean that Britain would leave the EU without a “separation agreement.” Stewart currently sits as an Independent British Member of Parliament for Penrith and the Border, a historically conservative constituency in Cumbria in the north of England.

Stewart explained that the UN has estimated that for the developing world to reach its development goals related to infrastructure, health, education, and other objectives by 2030, these countries will require $2.5 trillion per year. At present, even with major powers like the United States, United Kingdom, international organizations, and others contributing, the total only amounts to a seemingly large, but vastly insufficient, $1.2 trillion. How can we acquire the funds we need? Or as Stewart put it, how does one turn “billions into trillions?”

With this question in mind, the world has turned to the private sector because, as Stewart said, “The private sector is very good at doing certain kinds of things that really matter to development.” The private sector has the necessary capital, certainly, but it is also adept at sniffing out markets that create and sustain jobs, discovering strong investments, and developing partnerships. Recipient countries don’t want to feel like “charity cases.”

To incentivize the private sector to invest, governments have underwritten the risk of investment, reduced barriers to create an enabling environment, and helped minimize corruption. However, instead of increasing, the amount of private sector investment has fallen sharply in the past year. This plan has been, in Stewart’s words, “a failure.”

How could such a carefully laid plan go awry? The sheer scale of it all plays a role; $2.5 trillion is a lot of money to move. Furthermore, the private sector has had difficulty locating feasible projects as recipients for investment and faced challenges related to the specific context of individual countries themselves. Jordan, for instance, seems like an excellent recipient of solar power investment, being middle-income, peaceful, and (crucially) sunny. But according to Stewart, it has been “impossible to convince people to invest.”

First, there is no domestic demand. Jordan used to be dependent on a gas line from Egypt that was destroyed multiple times during the Arab Spring, so it diversified by signing contracts with other energy suppliers, whom they still have to pay. Second, Jordan can’t sell the solar energy either because of where the transmission lines to its would-be customers, Lebanon, Turkey, and Iraq, would have to be constructed: Syria. 

The example of Jordan underscored Stewart’s point that for private sector investment to be successful, we need to “contextualize it within a much broader sphere of diplomatic […] activity that reinforces it and adjusts it.” 

Stewart said that when it comes to thinking about international development, it is not sufficient to consider only economic growth. China for example, eliminated much extreme poverty, but at cost to its environment and local cultural communities. 

“The word ‘poverty’ removed from context can convey two thousand different things to two thousand different people,” he said, but it “doesn’t help you really understand what’s happening in someone’s life, and above all, it doesn’t help you solve it.” We need a path to development that is more sustainable. 

In regard to the ethics of using for-profit companies to implement development projects, Stewart said, “The closer you get to the project, the more uncomfortable you feel, and yet you should still be doing it.” A wind turbine company in Kenya might be making a significant profit, but no one else was willing or able to put up with the extreme risk of capital loss or the difficulties of negotiating with the local farmers and Kenyan government and building the necessary infrastructure. The key here is “to be very careful when looking at these companies [at] what they choose to report” to ensure that they are not creating more problems while solving an old one. 

In summary, Stewart doubted that private sector investment would yield a quantity of $2.5 trillion, but proposed that we should instead shift our focus to quality. Instead of thinking about aid as simply “dragging people out of poverty,” we need to think about building partnerships and the kind of society we wish to create. The aid and investment projects need “to be driven by the values and pride of the people of that country.”

To paraphrase Aristotle, we must be well in order to do well. The efficacy of our aid begins with the ethics of its implementation. Development isn’t just a literacy statistic or measure of GDP; it relates to the daily lives of people in a country, and aid must be as nuanced and complex as the communities it wishes to serve. 

The event was sponsored by the Program on Ethics, Politics, and Economics Annual Mars Lecture on Business and Ethics with support from the John K. Castle Fund for Ethics and International Affairs.

Written by Claire Zalla, Yale College Class of 2021.