Many have contributed the proliferation of the public-private partnership model to the entrepreneurship of UN leaders, particularly Secretary-General Kofi Annan, as well as to the demand of non-state actors and pressure from some of the UN’s most powerful states (Andonova 2006; Bexell and Mörth 2001b, 7; Global Policy Forum 2012). However, the
emphasis on public-private partnerships and private sector participation—as some international agencies and donor countries put it before the adoption of Resolution 56/76—in addressing the world’s pressing issues was not just an isolated and transient phenomenon. The commencement of such an idea and practice had much deeper socio- economic roots than a few UN reports and resolutions could reveal.
The public-private partnership scheme was a continuation of the trend of the “return of neoliberalism” in the UN’s development philosophy influenced by the trend to return to free market-based development approaches in the larger development landscape. It was a result of the complexity of the global issues that the UN, Member States, and private corporations were facing in the contemporary—especially the post-Cold War— world.
With the unprecedented degree of globalization and interdependence and the facilitation of fast technological development and innovation, world issues such as peace and security, economic and social development, the prevention of pandemic disease, and human rights promotion were increasingly interconnected—a situation thereby reinforced recognition of the need for multilateral and multi-actor cooperation for solutions to common problems (Kaul, Grungerg, and Stern 1999). In this time of opportunities and challenges, the UN and governments of Member States had more important roles than ever before. However, governments and international organizations could no longer tackle the problems by themselves and they must reach out to business and civil society as never before (Nelson 2002; Runde, Carson, and Coates 2011). For example, in “We the Peoples,” the UN stated that “we [are required to] think afresh about how we manage our joint activities and our shared interests, for many challenges that we confront today are
beyond the reach of any state to meet on its own… [n]o state and no organization can solve all these problems by acting alone” (UNGA 2000b, paras. 15 and 369).
The complexity of global issues increased the need for a transformation of the traditional global governance structure. Despite that states still enjoyed a central role in international politics (particularly in the UN framework), they could not address some of the most pressing issues of the world without moving away from coventional
understandings of authority and governance (Grande and Pauly 2007). “It is progressively more evident that a variety of challenges cannot be met efficiently at the national level, but require additional collective international, if not global, approaches” by bringing “all relevant partners, in particular the private sector” into the game (Kaul, Grungerg, and Stern 1999). Indeed, in many issue areas cross-cutting in to conventional turfs of firms, NGOs, and governments, de facto multi-stakeholder governance has already been in place (Abbott and Snidal 2009). To accept such multi-actor governance structure and to share the responsibilities and risks of transnational activities embedded in larger socio- economic contexts was a very pragmatic and reasonable move for all parties involved. The increasing complexity of global issues and the requirement of multi-actor governance provide the general condition for placing the issue of global public-private partnerships on the UN’s agenda. However, the somewhat sudden appearance and
emphasis of global public-private partnerships in the UN proper in the 1990s had historic foundations. As stated before, the UN and its entities have been engaged with non-
governmental partners since its inception. The question is, why the formal recognition of public-private partnerships as a viable development approach took place during the particular time period under investigation (the late 1990s and early 2000s), as there was
an extraordinary expansion of global public-private partnerships mainly during the 1990s (Kaul 2006). The United Nations Economic Commission for Europe (UNECE) asks the same question “[p]ublic-private partnerships in the delivery of public services have become a phenomenon which is spreading the globe and generating great interest. But why is such a concept, barely mentioned a decade ago, now attracting such interest” (UNECE 2008, iii)?
To answer this question, one has to look at the bigger picture of international economic trends at that specific time to understand why Resolution 56/76 was passed in 2001, not a decade before (or after). It is important to analyze the particular situations in which the UN and its agencies, governments of both developing and developed countries, as well as international corporations found themselves at the turn of the Millennium. Understanding the political and economic context for development policies in the post- Cold War era could illustrate the broader context within which the partnership agenda was brought into the ongoing international discussion of development.
First, UN agencies were facing financial hardship during the 1990s, although the issues of the world, especially development problems, demanded the world body to play an increasingly important role in the world. For the UN and its various agencies, the 1990s witnessed considerable cuts and constraints on their budgets, as well as declining public confidence in the organization (UNGA 2005a). Donors became increasingly concerned about the effectiveness of the UN and imposed a policy of zero real growth in its budgets (Buse and Walt 2002, 173). The UN, itself, was looking to strengthen the efficiency of the staff and organizational structure while facing pressing budget cuts. A candid confession stated that,
[t]he demands on the United Nations have expanded over time…
Economic, environmental, social and political changes have added further priorities for development assistance… Despite these growing needs, the key funds and programmes of the United Nations continue to face stagnation and lack of predictability and reliability in core contributions, accompanied by a significant growth in earmarked resources. Individually, the funds and programmes represent a very modest proportion of total resource flows for development purposes. The United Nations must
therefore seek to reassess and refocus its role in development operations in relation to significant new entrants in the development assistance arena and important shifts in the policies and role played by others (UNGA 1997a, paras. 3 and 4).
The UN further reported, “[t]here are a number of challenges facing the United Nations in this regard and the key one is increasing the availability of resources for operational activities” (UNGA 1997a, para. 168). Such predicaments made partnerships with “all relevant partners, in particular the private sector” even more attractive. In fact, private sector “[were] more than welcome; they [were] necessary” (Beigbeder 1997).
Second, at the same time, for most of the world’s countries, it was noted that “the nature of development has changed dramatically and is now characterized by greater political and economic openness as well as sensitivity to social and environmental concerns,” as the UN observed in 1997, “a dramatic increase in private sector capital flows, which have now become the primary engine for development in many countries that possess the requisite institutional base” (UNGA 1997a, para. 146). In addition,
Reinicke (1998) also argues that such trends of deregulating and liberalizing domestic economies and opening up trade and capital flows have sped up in the 1990s, driven by technology innovation and political changes.
Against such a backdrop, states (as well as international organizations)
increasingly realized that their conventional public power was diminishing in a global environment now mostly shaped by private actors (Reinicke and Witte 2003). However, the majority of the world’s least developed countries continued to have very limited access to private capital and to depend on a diminishing pool of official development assistance (ODA) while struggling with problems of poverty, low levels of social development, environmental degradation, and, in some cases, political instability (ECOSOC 2009, para. 6 and 7). For example, it was estimated that in 1996, foreign director investment in Asia amounted to 48 billion US dollars, but just 2.6 billion in sub- Saharan Africa (UNGA 1997a, para. 146).
The 1990s was marked with the tremendous shrinkage of ODA. At that time, ODA dropped from 0.33 percent to 0.22 percent in terms of the donor countries’ gross national income (GNI), falling much short of the targeted 0.7 percent. For example, Runde, Carson, and Coates (2011) reveals that in the past fifty years, the levels of official foreign assistance as a percentage of overall financial flow from the United States to the developing world have dropped from 74.8 percent in 1960 to 13 percent in 2011. Besides, there was an increasing suspicion that conventional ODA was not producing the expected development results in the receiving countries, which further discouraged donor
countries’ incentive to provide more money; instead, they increasingly bought into the idea of engaging business in development (Binder, Palenberg, and Witte 2007). The
financial hardships led Member States, as well as the UN, to look for alternative patterns. Global public-private partnerships became fairly attractive due to the expectation and belief that by involving the private sector, the burden of the UN and its Member States, both rich and poor, could be shared (Utting and Zammit 2006). Public-private
partnerships could be a “game-changing mechanism” to leverage a range of resources, expertise, and access to the capacities of nontraditional actors and to design effective responses to existing challenges as well as new ones that were evolving.
Third, while the UN and developing countries were experiencing financial difficulties, transnational corporations (TNCs) were in their prime. The economic boom of the 1990s further increased global trade and monetary exchanges, expanding the influence of TNCs into every corner of the world. Data provided by the United Nations Conference on Trade and Development (UNCTAD) show that for most of the 1990s, international businesses saw their greatest and fastest expansion to all corners of the planet. The UNCTAD estimates that during these ten years, the number of transnational corporations (TNCs) almost doubled from 37,000 to 60,000, while these TNCs’ foreign affiliates increased from 170,000 to 800,000. At the same time, foreign direct investment to developing countries increased from a little short of 44 billion in 1991 to more than 240 billion in 2000. It is argued that during this time private businesses have shifted strategies to do business in developing countries in order to take advantage of new resources and markets that have opened in the developing world; this, in return, drove a shift of business strategies to the inclination of investing and working with a variety of actors in the Global South in order to gain access to certain resources and to penetrate specific markets (Buse and Walt 2002; Natsios 2009; Runde, Carson, and Coates 2011).
However, the same period witnessed a decline of ODA flows from about 57 billion to 53 billion (UNGA 2001a, 5–6). This meant that while pro-profit activities increased exponentially, traditional ways of development assistance for developing countries not only did not see an increase but instead saw a steady decline. For the UN, it meant that the conventional approaches for encouraging development were not working as expected and that new modalities of development facilitation and resource
mobilization needed to be devised and sought. Globally, ODA was “no longer the only or even the biggest game in town,” and other positive development potentials needed to be levered and harnessed (Binder, Palenberg, and Witte 2007, 13).
Fourth, participating in public-private partnerships may be a smart move for TNCs to be politically responsive to the pressure they encountered (Utting 2000b). Although international economies were more and more characterized by economic interdependence and controlled by big corporations and elites, TNCs were increasingly faced with economic pressure and social expectations worldwide (Nelson 2002). The 1990s saw “high-profile world citizen campaigns” demanding socially and
environmentally just behaviors from TNCs (Stiglitz 2003; Wapner 1995). There was an imminent need to address global governance gaps and failures and the societal backlash that they had caused (Andonova 2006; Benner, Reinicke, and Witte 2003; Reinicke and Deng 2000; Ruggie 2004). Public-private partnerships emerged partly in response to such pressures from civil societies, campaigns, and movements concerned with the growth of unconstrained corporate power, corporate malpractice and abuses, and the perverse effects of “corporate globalization” (Bendell 2004a, 2004b; Broad 2002; Utting 2005a; Utting and Zammit 2006).
For global corporations, public-private partnerships provided an additional set of instruments to expand or consolidate their presence in developing countries and
opportunities to meet social expectations through the creation of competitive advantage and social benefit beyond a pure profit focus (Runde, Carson, and Coates 2011, 5–6; Utting and Zammit 2006). As the Global Compact suggests, “[a]s social, political and economic challenges (and opportunities)—whether occurring at home or in other regions—affect business more than ever before, many companies recognize the need to collaborate and partner with governments and civil societies in the management of increasingly complex risks and opportunities in social and governance realms” (Global Compact 2012a).7 Indeed, such challenges and public pressure were of highest
consideration for many corporate executives in their decision to seek partnerships with the public sector (Auty 1999). Among all public actors, the UN was of particular importance as “business believes that the rules of the game for the market economy, previously laid down almost exclusively by national governments, must be applied globally if they are to be effective; for that global framework of rules, business looks to the United Nations and its agencies” (Cattaui 1998).
In sum, the public-private partnership’s emergence in the late 1990s as an “innovative” and important instrument for tackling the pressing world problems on the UN’s agenda was an inevitable result of the political and economic conditions of that time, with a strong leadership commitment from Secretary-General Kofi Annan. When international conditions change, alternative approaches emerge as different ideas gains power and become publicized and translated into policies (Blyth 2002). With the idea of public-private partnership becoming popular at different levels of the UN bureaucracy, it !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
became a general belief that public-private partnerships would serve the purposes of both the UN and the private sector and, supposedly, provide a “win-win” situation for all, including the UN and its agencies, business corporations, as well as the states, societies, and peoples that various partnership programs would affect. However, instead of
assuming this creates a “win-win” situation, it is more appropriate to ask “who wins what and who loses what” (Richter 2003)?
In this context, the sudden popularity of public-private partnerships in the rhetoric and practices of international agencies in late 1990s and early 2000s was not a random phenomenon; instead, it had deeper socio-economic roots closely related to the trends and relative strength configuration among different international and national stakeholders. More than a decade has passed since the adoption of General Assembly Resolution 56/76 in 2001. During this time the public-private partnership has transformed from a “new” initiative into an established and applauded strategy of many, if not all, agencies within the UN system.