Human development and business: Implications for CSR

by Clelia Daniel cdaniel@csr-asia.comEarlier this month the United Nations Development Programme (UNDP) released its 2013 Human Development Report entitled “The Rise of the South: Human Progress in a Diverse World”. This year’s report places Asian countries at the forefront of the growing importance of the South but nevertheless warns them address growing challenges associated with an ageing population, degradation of the environment andwealth gaps, if they want to sustain their current progress. The report points towards an increasingly wealthy and sophisticated population in Asia, connected to and using the social media. This will have clear implications for social responsibility.
A few highlights for the Asia and the Pacific region:
· Most countries in the region (19) are in the medium human development group
· The average Human Development Index (HDI) value for the East Asian region is 0.683 and for the South Asian Region is 0.558. Both are below the world average of 0.694
· The East Asian region’s average gross national income per capita of $6,874 (PPP$ constant 2005 international) is about over two-thirds the world average of $10,184 but for the South Asian Region is as low at $3,343.
· The East Asian region has one of the highest employment-to-population ratios (74.5 percent)
· The region has rising inequality particularly with regards to income and access to education.
· Among countries in the region, child labour is relatively high for Cambodia and Nepal, where a third of children of ages 5 to 14 years are economically active.
Despite the increasing wealth in Asia generally, inequalities are nevertheless on the rise in man parts of the region. There is a growing awareness of a wealth gap, dividing rich and poor. For example, despite China’s growth and reduction in poverty, it has become a more unequal society, both in terms of income and human development. While China’s overall health status has continued to improve, disparities have grown. In many parts of the country, quality health care has become unaffordable for the poor. The report warns that failure to build accountable and responsive political structures may also cause unrest and civil strife if economic opportunity fails to keep pace with educational advancement. The same is equally true for some other countries in Asia.
Many countries in East Asia and the Pacific will see a striking increase in the share of the elderly in the near future. This will drive up the dependency ratio, which is the ratio of younger and older people to the working-age population. The productive-age population (ages 35–50), currently the largest population share, will reach retirement in 15–25 years. Investment in education could help to mitigate such dependency, the report says. A more skilled and productive workforce could offset some of the negative effects of a high dependency ratio and a large share of older people.
Asian countries have undoubtedly adopted and innovated in the field of communications, boosted by the spread of affordable technology and increasingly educated populations. The report gives the example of Indonesia, which has used telecommunications technology to connect its large cluster of far-flung islands and to open the country to the outside world. The human development benefits of this digital revolution are apparent, Indonesian analysts say, with mobile phones giving rural communities access to health information, banking services and agricultural market prices. Civic engagement has benefited and people increasingly have a voice to express concerns. Environmental activists use online databases and Google Earth mapping tools to publicize deforestation.
Environmental problems have also become widespread. In some cases environmental challenges associated with air pollution, lack of access to water and climate change related disasters are going to seriously impede development. The environment has already been at the centre of many local community protests against infrastructure developments, new factories and new power plants. This is set to continue and will put further pressure on the private sector to explain what it is doing.
However the Report warns that short-sighted policies, persistent inequalities and unresponsive political systems could threaten global and national progress. “Economic growth alone does not automatically translate into human development progress. Pro-poor policies and significant investments in people’s capabilities—through a focus on education, nutrition and health, and employment skills—can expand access to decent work and provide for sustained progress”, says the report.
Moreover, in places where the state is weak and incapable to respond to such complex challenges, companies have a responsibility (and interest) to use their influence and resources for development assistance. Private and public investment could help tackling challenges most regions—ageing populations, environmental risks, political pressures and inequality—and all will need to stay smart to maintain their momentum, the Report cautions.
The rapid growth in China and other Asian economies also benefits commodity producers in Sub-Saharan Africa and elsewhere through a prolonged commodity boom. Cheap imports also increase the purchasing power of low-income consumers and the competitiveness of export-oriented producers. While supporting industrial clusters and economic zones and expanding regional trade and investment, China and other emerging countries are also creating finance and credit facilities for small and medium-size enterprises in Africa.
Many countries have also benefited from technology transfer and foreign direct investment into sectors that contribute to human development. Indian firms, for example, are supplying affordable medicines, medical equipment, and information and communications technology products and services to countries in Africa. China is already influential in Africa, through trade and investment as well as through assistance and cooperation. Between 1992 and 2011, China’s trade with sub-Saharan Africa rose from U$1 billion to more than $140 billion.
By 2030 the Asia-Pacific will comprise two-thirds of the global middle class, the report says, meaning that billions of people will become increasingly educated, socially engaged and internationally connected. The increase in incomes and the diffusion of technology, which is driving economic, social and political expectations, is inevitably going to mean more sophisticated stakeholder scrutiny of business. The Internet and social media, as “low-cost aggregators” of public opinion, are amplifying people’s voices. This will have an implication for businesses as people find new ways to complain and launch online grievances against companies.
(Clelia Daniel is the Program Manager of the Professional Masters Degree in CSR offered jointly by AIT and CSR Asia.)

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