When activists discuss the way less developed countries have missed out on the benefits of globalization, multinational corporation are often portrayed as the villain. To George C. Lodge they're the solution -- and the only one.

A professor at Harvard Business School for more than 40 years and expert on developing economies, Lodge has developed a radical plan to combat global poverty by harnessing the power of big business, rather than complaining about its effects.

His proposal would see the world's biggest multinational corporations, with the support of charities and the United Nations, set up and manage aid projects with the eventual aim of making a profit.

Thus, as one example, Swiss food giant Nestle could manage a Third World dairy, with building services group Cemex providing the housing and Ericsson, a leading telecoms player, sorting out communications.

In a newly-published book co-written with Australian aid sector economist Craig Wilson, Lodge argues that decades of global aid spending on poorer countries -- some $2.5 trillion since World War II -- has largely been wasted.

"Much of the money goes to governments," Lodge argues. "The problem is that in many countries of the world, governments lack either the desire or the ability to reduce poverty.

"So what you are doing is sustaining a status quo which may indeed be the cause of poverty. And people are realizing that this is the case, even the World Bank."

Where poorer nations have pulled themselves upwards, such as Japan, South Korea and Singapore, business has been at the center of wealth creation, Lodge notes.

His book calls for the establishment of the World Development Corporation (WDC) -- an aid organization which while "blessed" by charities and the UN, would be run by multinationals on strict business lines.

"The WDC would be owned and managed by about 12 multinationals. I'm thinking of the companies that have historically had a good record in the developing world: Unilever, Nestle, Cemex, BP, Shell and so on," says Lodge.

"The staff of the WDC would identify a country, identify a project in that country that would have a maximum effect on poverty and that would, eventually, be profitable, and thus sustainable."

Initially, however, projects would be sustained with public money.

"That raises legitimacy problems, of course -- why should public funds be used to finance a profitable venture? That legitimacy problem would require the oversight of NGOs and the UN, that's why their involvement is so important," he says.

Lodge bases his idea on hard experience. In charge of international labor relations while serving in the Eisenhower and Kennedy administrations, Lodge traveled widely in developing nations.

He later helped set up INCAE, now Latin America's best-renowned business school. There, Lodge spent three years studying a project in Panama where a provincial bishop had established a co-operative to assist poor farmers.

It was only a success, he, says, because it made a profit: "There isn't enough charity money in the world -- or tax revenue -- to reduce global poverty substantially. It can only be done by profitable business."

The WDC would be "the missing link" in development, says Lodge, who has discussed it with charities and the UN, and even has a chief executive of a global company -- who he declines to name for now -- slated to head it.

The WDC would also tackle fundamental contradictions caused by the increasing primacy of global business.

"The old idea that a corporation derives legitimacy from satisfying shareholders and competing to satisfy consumer desires is no longer adequate. One reason is that the sum of consumer desires does not necessarily equal community need," says Lodge

"Governments, of course, are supposed to define community needs and see that they are fulfilled. The trouble is that in much of the world, governments are not doing that in a way that is acceptable to public opinion.

"So the multinational is left, forced in effect to itself define community need and to implement it. This is a legitimacy problem, because nobody elected them to do that."

Is business the answer to global poverty?

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Business is the answer to solving poverty and whilst this concept has merits I can't see that it is addressing the causes of poverty. What is needed is an incubator programme that promotes the development of micro businesses opportunities in rural areas. This could be simply done by giving people access to appropriate technology, education and ideas.

No, business is not the answer. The issue is how to make sure that all and sundry benefit from them. Leaders, especially of third world countries, need to stop corruption and siphoning off their countries treasuries.

If there comes to be a business with a very large co-operative network and carries out its activities transparently, business will be the answer to global poverty.

Is business the answer? Yes, because I believe foreign investors and transparency on the part of government are the essentials tools necessary for economic development.

The problem of solving poverty is not dependent on any institution or organization. It is our mindset, individually and collectively, how we look at solving the problem of poverty.

Poverty could not have been created if we could have developed our inner world, our human nature, at the same pace of the development of our industry and commerce.

The problem with business is the same. Every corporate entity is suffering from megalomania and in this race it is very difficult to treat a man as a human being. Corporate social responsibility may be showcased and glorified but the efforts in most of the cases is a human being treated as a resource and not as something which has feelings and needs care, sharing and love, not money only.

We need to change our mindset. We need to start afresh with a simple mind.

Business is the answer, but where should it be established and where has the poverty dominated in a country?

When we are establishing business we shouldn't forget to establish most of them in the rural areas, because it is the place where poverty dominates. When we shift all or the greater part of established businesses to urban areas, it prompts the rural dwellers to move to the city, and this will bring over-population and unemployment and hence poverty to the rest of the unemployed in the city, and the rest in the villages who have not got a job at all.

Besides, let us not encourage too much importats that will collapse most businesses that sustain or keep people in employment, especially when the imported products are too competitive.

Moreover, people should be educated on how to establish and ran a business on their own, without always relying on others for their daily bread. This must be done with the aid of the government, giving out loans with a low interest rate, or if possible no interest.

Most times, too, we need to pay attention to the skilled people who invent something new but don't get help to further their researches. For this research, if it is good, will affect the community greatly and therefore needs to be financed.

Business is a tool, a way of doing things or achieving goals. The business nature of existence is to be useful, to be effective.

Just as we can use a hammer to get a nail into the wall or a car to transport ourselves; with business we can make cheaper cell phones, better use of energy or lower cost by smart designs of structures and processes. As we can see, is a much more complex tool than a hammer or a car, because it is a combination of tools such as marketing, human resources, finance, engineering, etc.

It is not the business itself the one that is going to take people out of poverty; the outcome of the use of this tool depends on the use that we give to it. Just like a hammer can be used to hit a nail, smash a window or be painted as a work of art, or a car to go to work, race in the street or sell it by parts; a business can be used with many more intentions than can solve very complex problems because of its level of sophistication.

Yes, I think business is the answer to global poverty, since any involvement in a business activity of any kind, no mather how small greatly contributes to improving the rate of poverty around the world. Secondly taking part in any business, indirectly provides employment.

I think that it is not business which can help us out of poverty, but education, and only education, which can help is become happy and wealthy.

I totally agree that business is the answer to global poverty. Our company recently set up a join venture in a sports company with the community to address unemployment and youth problems in their communities. I support Lodge in his quest and it will succeed in Africa for sure.

In the current capitalist system, a high level of unemployment is desirable. This is because salary levels and inflation can be kept low. The capitalist system therefore self-regulates to a high level of unemployment.

Private industries can produce jobs more efficiently then governments. The problem is that there is little incentive to do so.

If you want a capitalist system to self-regulate to a low level of unemployment you need to introduce an unemployment tax. This tax should be levied against all persons making more than the median income. If the unemployment rate is 10% then a 10% tax should be levied to help the government pay to employ these unemployed individuals.

If wealthy people and corporations want to increase their wealth, they would need to create more jobs so that this tax burden can be reduced.

Yes, ethical big business may provide the answer to global poverty, but unethical multinationals are the cause.

I have always held the view that multinationals operating overseas should conduct themselves in an ethical manner to make this a better world. I have always held that the US multinationals and their affiliates should hold the ethical behavior as a standard operating procedure.

Is business the answer? I do not think so. Political investment (conditions of aid from the north) plus skilled manpower, strong government and commonality among the population working together, is needed to alleviate poverty.

A good example is India. It has been getting aid, especially in the energy sector from Great Britain, getting grants to build power generation stations. The same was true for Japan and South Korea, getting huge aid from America during the Cold War.

The join clubs like the EEC (now EU) or ASEAN can help -- as it has helped Spain, or for that matter Poland and Vietnam.

Excellent. I would like to meet the author.

Yes! I agree 110%

(President) Lula da Silva of Brazil has it right. The $50 a month that is paid to people living in extreme poverty eliminates several problems at once with the lowest cost to the Brazilian economy.

This $50 will go a long way toward Brazil meeting the Millennium Development Goals. It significantly reduces the number of people living in extreme poverty and increases the number of children receiving an education.

This $50 a month will spur new demand for products and services, which will result in the creation of a large number of new jobs. A higher-educated population will attract more foreign investment and more jobs. This will in turn reduce the number of people entitled to this grant. When the unemployment rate drops to less than 6%, then the grant can be eliminated and the normal safety net projects such as soup kitchens, shelters and disaster relief can be implemented.

This model, along with investments in infrastructure, should be implemented in other underdeveloped countries.

As this article points out we all know what causes poverty -- no money. If you have money you would not be poor. So the logic simply flows to how do you get money? You work for it. And how do you do that? You start a business or you work for one. This is a pretty clear connection.

However, looking at those statements there are some fundamentals that must be in place for those equations to work.

There must be property rights, there must be rule of law. Without this in place then why would any business get created if someone else can take your business and your investments.

Then that leads to the enforcement part of the law. What good will come if there is no one enforcing the law? That is the corruption that as this article outlines has diverted so much aid and support away from those who need it. Or take bribes in order to start a business or keep your business.

So if a country has the basic solid structure to support individual rights, and protect them. Then starting businesses, having companies create jobs...that will over time bring an end to poverty just as described.

The issue of global poverty could be addressed from multiple points of view. One cannot in absolute terms say that business is the answer to global poverty. But my view is that, to a very large extent business can contribute to poverty reduction in developing countries, Ghana to be specific.

In Ghana, for instance, most of the people doing business are in the informal sector and ever since some programs had been put in place by the government with support of its development partners towards the growth of the private sector, from my experiences there is positive change in the well-being of the people.

Although I agree business should be used more to contribute to combating poverty, relying solely on this mechanism may lead the government to being more and more disempowered.

By focusing solely on businesses, governments may no longer be supported, for example by means of education, capacity building and finance. It may even cause good (potential) government leaders to choose to work for the private sector in stead of working for in government administration.

There is always a need for good and strong government services, for example for providing social services, taxation departments, infrastructure etc regardless of the business environment, and business will thrive even better if a good infrastructure is present.

A good business environment can create a stronger incentive to achieve a good government, but to achieve good government is likely to require more than just the incentives provided by business ventures.

Business organizations and especially large globalized businesses have at their command expertise; initiatives and resources which governments led by 'politicians' can hardly match by any stretch of the imagination.

Politicians again know that they have a short life of service and would therefore hardly have the resilience to keep the needs of the communities 'going'. Business has long-term interests and business leaders with a holistic touch can do wonders that no government can do.

The Tatas of India may be one fine example and there are many more such men of goodwill that I have no space to mention. Kudos for at least generating this thought which hopefully will germinate in the 'minds' of the business world.

Look around you. What do we see? Offices, restaurants, highways, airports etc. What makes the construction or development of these facilities possible? It's all money.

I believe the main difference between a developed nation and a less developed one is how efficient their financial systems is run. When I mean financial systems, I mean issues such as allocation of capital, financial liberalization and government incentives to spur both foreign and domestic investment.

Poor countries are poor and will continue to be poor unless they improve their financial industry. They should open up their economies to foreign investment gradually, cut down corruption so that money is diverted to channels that will actually stimulate economic growth and increase the wealth of the general population.

They should also strive to improve financial transparency so that companies' financial information is known to the public. When the financial information of companies is disclosed to everyone, there won't be any group of people who is more advantaged than the other to reap commercial profits. When this equality is achieved, companies will less likely resort to corruption and have more reason to improve their company financial performance to attract potential investors.

Is business the answer? No! Education is the answer to global poverty. Educate people and they will find a way to come out of poverty.

Perhaps these businesses, instead of contributing funds that may never lead to a result due to the potential for corruption, should invest that money into educating children and their families.

The old saying goes, "knowledge is power," and without creative minds rationalizing the best options for themselves, the status quo will prevail. However, if you educate those who are young enough to mobilize themselves out of a bad situation and yet give those who are unable to leave for a better life the chance to to maximize their own profits, eventually the private business sector will close the gap between the rich and the poor....or at least narrow it to some degree.

Poverty cannot be resolved by business alone. Business's primary motive is to bring riches to its principals, not eradicate poverty.

Some African countries have in principal gone backwards in the last 20 years. Globalization has given rise to mammoth economic corporations monopolizing entire market segments, the result of the unbridled greed of business owners, primarily from the West.

Education is the key to tackling poverty. Everyone must have the right to education. Education will give an individual the means to escape poverty.

The answer to global poverty is that it is not a problem that needs answering, but rather a reality that has been with us from the beginning of human time and will always be with us. Even in communal organizations, some individuals have more than others. Poverty and wealth are relative faces of the same coin (human development).

For example, if the world were to plunge into nuclear war tomorrow, whereby all of the historically wealthier nations of the world were plunged into a world of contamination and gore, and Africa was spared, then the currently poor nations with their green forests, water and animal stocks would be FAR richer than the rest of the world.

My point here, of course, is that to accept world poverty is to accept reality. We should strive to help alleviate our fellow man's plight, but perhaps we should focus within, before looking without.

Most small communities (especially in Africa) have little money to invest and no buyers of products and services that might be produced. Agriculture products are produced but nobody has money to purchase the products produced. The products have to be sold at near cost of production, traded for other products, or consumed by the producer. These communities do not have the minimum level of products and services needed for existence.

Is there a solution to this problem? Money is available for investment in small businesses, but what good is this in a community with few buyers? What good is this in a community with low education and few entrepreneurs?

A solution could be to set up several mutually compatible service companies (franchises) at the same time. These companies would be set up on borrowed money, which would bring money into a community.

The companies would create a large number of new jobs. They would purchase the agriculture products of the community, add value to these products, and re-sell the products back to the community with only a small markup to cover operating costs and to repay the loans.

I personally think there is no answer. These people breed faster than any business could ever keep up with. They keep having babies even though they are starving and homeless?? They do this no matter what is done for them. I for one do not want any money to go to these countries!!!

Sure!! Busineses can bridge the gap between the wealthier and the poorer ones. There is one solution for people community in Africa where there is very little support from the government in monetary terms and where people do not have any resources for generating funds for their livelihood.

With microcredit, you invite an entrepreneur to start operating a "bank" in the region to provide the loans, initially for encouraging people to carry some new business activity on small scale. This money is then returned and lent to another person.

In this way everybody is encouraged to work for one purpose and the money gets fully utilized. This solution is well tested in Bangladesh.

Can business help? Absolutely.

In the ideal world a country is run by a board of directors who oversee every part of it with a view to making it work as a business. Thus the health service would work so efficiently that it couls esily be sustained from specific taxes.

No company director would countanance the manufacture of gas guzzling vehicles that are able to exceed the legal speed limit. Costs would come down dramatically if vehicles able to go too fast were banned from being made and imported.

Like wise the most efficient transport system is the railway. With a proper system in place costs would tumble and roads would be emptied.

Only businessmen can achieve these result, not namby pamby, frightened to lose your vote politicians.

A forever changing government is the surest way to ruin. But we must not forget the safeguards. Otherwise our directors may become despots.

It is an undeniable fact that businesses create wealth. C. K. Prahalad in his book ‘The Fortune at the Bottom of the Pyramid' gives another strong view of how poverty can be alleviated. It is time we listen to these good brains. Governments are wasting poverty-alleviation monies.

In my opinion there is a point which seemingly everyone here has forgotten -- that many of the people living in poor countries already do business, and do it good!

There's a reason why Latin American countries score fairly low on income-distribution rates: there are many people there who make millions a year producing everything from shoes to computers. To artificially create a ‘corporation workgroup' in order to ‘develop' a country like Brazil would only take these people who are already producing there out of the market! This is really not a solution, not even for the poorest of the countries.

I do think that business is the one thing than can bring countries to develop themselves. But this business should be created inside these countries, and not through an international collusion.

For me, the only way to develop poor countries is through fighting the overwhelming corruption inside these countries. Not only the independent work of people such as the Transparency International plays a big role here, but also international politics have to do their part.

Helping to create small businesses is certainly one answer. 2005 was the International Year of Microcredit. A small loan of $150 can start a small business and mean an income for the borrower. A better quality of life results for their children, too.

Give a man a fish... or a fishing industry.

This conversation is a wonderful start in the right direction. Who burnt the bridge between the wealth-creating power of businesses and the state of lack which characterizes the poor's existence?

We need to think more deeply about how to harness the strength of the profit motive so that the poor are not favored, aided or given welfare but have the same opportunities and support as anyone else.

Yes, business can be an answer to poverty, hunger, shelter and education. However, there is a need to create a system.

Let's take an example. Choose a country in Africa which may need new living areas. Approach two private aid sources. Approach a large construction company. Approach a shipping company. We have the capital to ask the two to provide the material and help for about two years in that country to build living areas, schools, hospitals. It will cost a LOT! But will be worth it.

Similarly, the locals can be helped to put together an agricultural background. Ultimately this is all possible only through a strong source; strong in capital, manpower and logistics. And this is only through business.

Can business end poverty? Yes, in many ways it is if harnessed appropriately. Being in Africa I see a real lack of empowerment and I think helping people help themselves does a lot more than making them dependent.

No, business is for people who have excess. People who cannot solve their basic human needs of shelter, food and clothing have nothing to invest.

I believe that before getting a man a job, solve his pressing problem first. This will prepare him mentally for the task. The have should aid the have nots to solve their basic human day-to-day needs. It is after this that business could come in.

Is business the answer to global poverty? I say yes to quite an extent. The thing we need to be sensitive about is that the interests of the involved nations should not be lost while thinking of business sense.

Education and working on a common platform seems to be a logical solution to the above. There needs to be a strong political will and we need to look beyond natural and mental barriers.

Well, whether we Africans like it or not, we need to come to a common understanding and quit giving up on Africa, put the blame on our leaders, try to combat poverty by all means possible.

At the end of the day, we will be the ones to blame. Why? Because I believe we have an opportunity to make a difference.

I agree that business WILL change the face of Africa, what I am not satisfied with is that Western companies should come and implement their firms in Africa (mark you I am not trying to be biased or anything close to that).

Of course, there are plenty of these companies as mentioned earlier eg Unilever, Microsoft, Bata, the list goes on, but what difference does it make?

None at all, because these businesses are being pushed to deliver or else they are shut down; of course to them there is nothing to lose only something to gain.

Is business the answer? Yes!

The business world development path seems to be closer to a positive kind of democracy than most of today's politically-based governments, by allocating a reasonable part of the available resources to production of what most people actually want.

However, there is a need for transparency and clarity which is almost as difficult to achieve for the business world as for politically-based organizations.

This forum is great. One thing I feel we cannot miss in this whole picture is that in order for a multinational business to help with poverty in developing countries, they must also work within the host culture to acheive objectives.

By this I mean that culturally motivated ideas which work in Western countries might not be congruent with the culture and society of various developing countires. Sometimes big business could mean the erosion of culture and if care is not taken can become a new colonialism.

I strongly believe that business is an answer to global poverty. But the problem is with the mindset that business is all about profit making. Business with philanthropic motives can solve a number of problems which we face in the current scenario.

But obviously, there is a difference in business and charity.

No, business is not the answer. The answer in education. Each country has their own culture which you cannot change. Respect the culture, and then educate.

Some of these multinational firms have very aggressive business policies that only worsen poverty among the locals.

An example is Nestle, because one of its principal products, chocolate, which is made from cocoa beans, a plant mainly grown in poor nations in Africa, the Caribbean and South America, is priced too high for locals consumers in these nations where the Income levels are very low.

Business alone is not the answer. It depends on the willingness and ability of businesses and countries to implement a cultural change on an unprecedented scale whilst also achieving some clear business benefits.

It's essential to define a solution that is self-sustaining and allows countries in poverty to play an active and positive role in the world economy.

I'd be inclined to say that the key is maintaining the external view and developing towards that. It's much the same principal as many successful businesses run on. Perhaps a different interpretation on the question -- running a country like a business is the answer to global poverty.

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