Amajor promise of economic globalization isthat it will create a tide of prosperity thatwill lift all boats, and overall, even if some

people gain more than others, the kind of crushingpoverty that has long been part of the humancondition will be removed. Business as the maincreator of wealth and as the beneficiary of the freetrade and flow of capital that are pillars of economicglobalization is clearly an important element ofglobalization’s poverty alleviation agenda. Indeed,some authors claim that it is only by encouragingfree enterprise that poverty can be ended.

Yet, is it reasonable to argue that business has aresponsibility to tackle poverty? Should companiessimply conduct business according to the laws of theland and the marketplace, or should they consciously

seek to affect poverty? Is there a role business canplay that is different from, and more efficient than,that played by international development agencies?

The bottom of the pyramidMuch has been said about “the fortune at the bottomof the pyramid” and social entrepreneurship. Bothof these concepts have become powerful ideas inthinking about corporate responsibility in terms ofopportunity rather than danger. Along with specific

poverty-oriented business models such as fair-tradeand micro-finance, they promise to harness thestrengths of business (for example, innovation,raising capital, marketing, managerial efficiency)and set them to work as assets to benefit the poorand marginalized. Thus, in addition to brands suchas Max Havelaar, Equal Exchange, Honest Tea, andGrameen that have been built on serving the needsof the poor, today companies such as StandardCharterered, Vodafone, and Deutsche Bank havedeveloped product lines that address specific nichesin what have hitherto been considered underservedmarkets. Moreover, the idea that the poor andotherwise marginalized sections of society presentopportunities for business is nothing new: one onlyhas to think of Avon, which began with the idea of

selling cosmetics to (typically rural) women in theUnited States through a network of entrepreneurspicked from people who lived in those samecommunities – a model that has been exported tocompanies around the world.

However, poverty as opportunity is only one aspectof its relationship with business. Furthermore, tothink of the poor as only producers or consumers isto ignore the complex nature of poverty: there havebeen numerous studies that show there are

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Can business eliminate poverty? And, if yes, should it? As business

becomes more global in scope, companies need to think about how they

will address the poorest sectors of the planet. Michael Blowfield talks

about the four dimensions of the business-poverty relationship.

Globalization and poverty

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Should companies simply conduct business according tothe laws of the land and the marketplace, or should theyconsciously seek to affect poverty?

gender, racial, national, political and other non-economic dimensions to poverty. Thinking of povertyas a lack of money, or a lack of skills andinfrastructure necessary to obtain it, can lead tosome very narrow and potentially misleading ideasof what poverty means and how it can be addressed.For instance, there is heated debate as to whetherfree markets can prosper without a functioningdemocracy; there is evidence that poor rural womenare especially prone to exploitive labour conditionsin developing economies; and there are manystudies of how ethnicity affects access to economicopportunity and political power in regions such aswest Africa and south Asia. Although progress out ofpoverty is still often measured in terms of income,access to education, infant mortality and disease,several international development agencies use amulti-faceted model to understand poverty; suchmodels consider not only financial capital, but alsoaccess to natural resources (natural capital), skillsand education (human capital), infrastructure andtechnology (physical capital) and participation insocial networks (social capital). It is the blend andbalance of these different types of capital that,according to what is known as sustainablelivelihoods theory, ultimately determine whether an individual or family can prosper.

Sustainable livelihoods theory is just one of themany lenses that have developed over the years tohelp understand poverty. Authors since at leastVladimir Lenin have critiqued the system ofcapitalism as causing poverty, either globally or interms of a developing/developed country worlddivide. Others writers (such as William Greider as

well as Will Hutton and Anthony Giddens), in theirbooks on global capitalism, have focused on howthe behaviour of business or of particular industriesand countries relates to poverty. Even those whoendorse the ultimate efficacy of globalization arguethat the process needs to be better managed andthat the role of business cannot simply be left tounfettered free markets.

A business-poverty relationship?What emerges from these and other theories ofpoverty and development is an awareness of thecomplexity of the factors surrounding poverty itselfand of the business-poverty relationship. Yes, thereare geographical dimensions to poverty – some

countries are much poorer than others (thedeveloping/developed country divide), but one onlyhas to look at disparities in wealth within countriessuch as the US, Russia and Brazil to see that notonly inequality, but also real poverty, exist in richnations. Likewise, there is evidence that womenexperience poverty differently from men and insome cultures are marginalized in ways that menare not. But this is not to say that all women arepoor or denied the opportunity to progress. Overall,there are national, gender, racial, ethnic, and otherdimensions to poverty; but they do not fully explaineither the causes of poverty or its possible solutions.

Given this degree of complexity – and the factthat, historically, business has not been considereda partner in international development – it might beargued that business should not be overly botheredwith poverty and its alleviation. As noted, there are many who believe that free markets will ofthemselves eradicate poverty in due course, even ifsome have to endure pain in the process. As HenryWilcox, a character in E.M. Forster’s Howards End,observed during an earlier era of economicglobalization, “The poor are poor, and one’s sorry forthem, but there it is. As civilization moves forward,the shoe is bound to pinch in places, and it’s absurdto pretend that anyone is responsible personally.”

But that era came to a screeching halt in theearly 20th century, in part because of perceptionsthat it was unfair and a cause of immiseration(economic impoverishment). The continuing protestsagainst globalization by supporters of workers’ rights,indigenous peoples, the environment, and humanrights; the emergence of popular anti-big business

movements in countries such as Venezuela andBolivia; as well as increased unrest in globalization’ssuccess stories in countries such as China and India suggest that the fairness and justice ofeconomic globalization is still widely disputed. On top of this, poverty has been associated with a rise in militant religious groups from Israel toIndonesia; and, in wealthy Western markets,influential segments of consumers are factoringpoverty alongside human rights and environmentalissues into their buying behaviours.

While there may not be a watertight case as towhy business should pay attention to poverty, thereare numerous reasons why the issue may gain manycompanies’ attention. However, these reasons vary

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One only has to look at disparities in wealth withincountries such as the US, Russia and Brazil to see that notonly inequality, but also real poverty, exist in rich nations.

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The only way is up.

according to the way particular companies orindustries interface with poverty. We have alreadyseen that some see poverty as a business opportunity;and this thinking is influencing industries such asbanking, food and agriculture, and householdproducts. But, as mentioned earlier, that is only one dimension of this relationship. Business canalso be a cause or a victim of poverty, or it canremain neutral.

Marley, not ScroogeOne of the drivers of corporate social responsibilityhas always been concern that business exploitspoverty through such practices as low wages andpoor working conditions that take advantage of laxlabour and health and safety laws. Recall EbenezerScrooge’s comment to the ghost of his formerpartner, Jacob Marley, in Charles Dickens’ AChristmas Carol: “But you were always a good manof business, Jacob.” Marley responds in a flash.

“Business!” cried the Ghost, wringing its handsagain. “Mankind was my business. The commonwelfare was my business; charity, mercy,forbearance, and benevolence, were, all, mybusiness. The dealings of my trade were but adrop of water in the comprehensive ocean ofmy business!”

Globally, companies in oil and mining have beencriticized for abusing communities near theirfacilities, undermining their sources of income,ignoring their human rights and taking away theirland and water rights. In these instances, businesscan be accused of being a cause of poverty, which isa very different dynamic for the company to address.

Equally, business can suffer from poverty and itsconsequences. For example, since the 1990scompanies in Africa and parts of Asia haverecognized that high rates of HIV/AIDS and otherfatal diseases starve them of the skilled workforcethey need to be competitive. Likewise, if schools donot function properly or if (as is the case with manyschool-age girls in south Asia and sub-SaharanAfrica) significant sections of the population receive

little or no formal education, companies willstruggle to find an adequate supply of workers.

However, it also needs to be acknowledged thatcompanies can treat poverty with indifference.Private capital has grown to surpass other forms offoreign direct investment (FDI); and, after a dip inthe early years of the new millennium, FDI indeveloping countries has increased. But thesecountries still only account for 36 per cent of allFDI, and the proportion going to poor countriesshrivels as soon as China and India are removedfrom the statistics.

It can be argued that multinationals depend onsuch countries for growth, (and this is true in placessuch as China, India and Brazil) but developedeconomies are still the most profitable markets.Furthermore, as the threat of climate change andother aspects of sustainable development becomebetter understood, the role and nature of growthitself is coming under the spotlight, raising allmanner of questions about what sort of prosperitythe Earth can accommodate in the future and howthe poor will figure in what might be a very differentmodel of economic progress. ■

ResourcesMichael Blowfield, “Business and poverty: A framework”, Presentation to the University ofCambridge, Post-graduate Certificate in SustainableBusiness, April 2007.

Paul Collier, The Bottom Billion: Why the PoorestCountries Are Failing and What Can Be Done AboutIt, Oxford University Press, 2007.

William Greider, One World, Ready or Not: The ManicLogic of Global Capitalism, Penguin Business, 1998.

Will Hutton and Anthony Giddens, GlobalCapitalism, New Press, 2001.

Kevin O'Rourke and Jeffrey Williamson, Globalizationand History: The Evolution of a Nineteenth-centuryAtlantic Economy, MIT Press, 2001.

Joseph Stiglitz and Andrew Charlton, Fair Trade forAll: How Trade Can Promote Development, OxfordUniversity Press, 2007.

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Michael Blowfield (mblowfield@london.edu) is a Teaching Fellow at London Business School, specializing in corporate responsibility.

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London Business School Regent’s ParkLondon NW1 4SAUnited KingdomTel +44 (0)20 7000 7000Fax +44 (0)20 7000 7001www.london.eduA Graduate School of the University of London