State-Business Relations Beyond Growth: Bringing in Development

Type Report
Title State-Business Relations Beyond Growth: Bringing in Development
Publication (Day/Month/Year) 2016
The signatories of the UN Sustainable Development Goals (SDGs) have called on a wide
range of businesses ‘to apply their creativity and innovation’ to address sustainable
development challenges. Yet the role of business in contributing to development depends
profoundly on its interaction with the state. This paper asks how states and businesses
interact in different contexts to shape development outcomes. A considerable literature has
explored state–business relations in producing investment and growth, and the factors that
make these relations effective. However, most of these studies either weakly reflect or fail to
reflect: (a) the process of interactions and how these are shaped by, and at the same time
shape, the power and interests of the actors involved; (b) different political and economic
contexts; and (c) the implications of state–business relations beyond economic growth. The
paper makes the case for analysing state–business relations beyond economic impacts, by
considering the implications of these interactions for three defining challenges of the early
twenty-first century – namely inequality, exclusion and environmental degradation. Through a
review of four case studies from Chile, Tanzania, India and Ethiopia, the paper explores the
actors, structures and processes of state–business relations, along with development
outcomes achieved. We employ the concept of ‘negotiation’ as a metaphor to describe the
ongoing interaction that is state–business relations, in order to move the frame of analysis
towards a goal-oriented process and to highlight the importance of power and interests in
relation to these goals. Building on the case studies, we suggest three ways forward to
develop clearer models of state–business relations in development. These are:
(1) understanding state–business relations in different institutional contexts, how they
emerge and how they operate, and their implications for development outcomes;
(2) identifying specific factors that shape the process of state–business relations; and
(3) explaining developmental effectiveness of state–business relations, considering also
trade-offs and contradictions between different development goals. The challenge of
developing adequate frameworks for understanding constantly evolving state–business
relations in development is large; but given renewed calls for states and businesses to work
together for development, the issues identified here should expectably have a central place
on the research agenda.

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