Archive for March/2007

J.Pozuelo-Monfort, MSc candidate in economic development at LSE

THE SILENT TAKEOVER is a very well-written book that walks us through the process of liberalisation and ever-increasing adoption of the neoclassical economic policies that started with Thatcher and Reagan in the early 1980s. Policies better understood in a scenario characterized by the so-called Washington Consensus, suggested by the US economist and member of Washington-based think-tank Insitute for International Economics, John Williamson.
Noreena Hertz is considered a center-left thinker that understands and shares some of the views of the anti-globalisation movement. Her writing is descriptive and her conclusions follow from a series of facts few can counter argue. It is the kind of thinking everyone would use to try to determine the reasons underlying a problem, the kind of thinking that everybody would use to try to explain the reasons behind a growing gap between rich and poor, a growing decentralisation and deregulasion allowed by central governments, a silent takeover on behalf of corporations, that quietly seem to have taken the steering wheel of this world without few individuals realizing of the consequences.

The book calls for action and demonstration against our own governments, that pressured and lobbied by multinationals, are unwilling or incapable of setting policies in the interest of their fellow citizens and the world as a whole. Our own governments, unable to cope with the challenges of an already challenging century that started with the 9-11 attacks and a war, that against terrorism, with the ability to spread conflict and unillateralism across the world.
The true war is an unfought one. The true war is a conflict that the media do not talk about. It is a war against inequality and hunger, it is a war against poverty and abuse of power in the third world and developing economies. The industrialized nations cannot afford any longer to continue looking aside. Multinationals do have their role. But by no means they should determine the direction of many of the policies defined by countries in which capitalism has evolved into a more extreme version.
Before the apparent compliance of our own central administrations with a corporate world in which less corporations dominate more of the consumers’ pie, before the apparent unwillingness of our own central administrations to step up and face the challenges of an unequal world, Noreena Hertz explains that the citizens must express their discontent as they have done in the past in so many circumstances regarding so many issues.
The world is facing challenges. Only its member citizens can, at this point, change the course of an already misguided course.

El 25 de Abril tendrá lugar en Madrid una jornada relacionada con las inversiones socialmente responsables.
En la última década han confluido distintas tendencias que cuestionan la manera tradicional de abordar las decisiones de inversión. Por una parte, la preocupación por la Responsabilidad Social Empresarial ha impulsado a las empresas a integrar las variables sociales y medioambientales en las operaciones del negocio y a mantener un diálogo más fluido con sus diferentes grupos de interés (clientes, empleados, proveedores, etc.).
Por otra, en el sector de la filantropía surge con fuerza un nuevo perfil de donante que asume riesgos similares al del inversor. Se trata tanto de personas como de instituciones, que buscan emparejar sus motivaciones sociales con la búsqueda de cierta rentabilidad económica. Esas tendencias han impulsado la creación y desarrollo de distintos instrumentos o fondos de inversión caracterizados por el uso de criterios sociales y medioambientales (fondos éticos o, más propiamente, fondos socialmente responsables).
Por último, en el campo del Desarrollo ha surgido una nueva corriente que está rebatiendo la manera tradicional de abordar la solución de muchos problemas sociales. Este nuevo enfoque, conocido comúnmente como “la base de la pirámide”, defiende que los pobres pueden ser clientes excelentes, y que el secreto está en que las empresas mediante la innovación desarrollen productos y servicios para esos miles de millones de personas que se encuentran en la “base de la pirámide”. Entre los ejemplos más significativos se encuentran las “microfinanzas”, una tecnología crediticia, desarrollada en sus orígenes por algunas ONGs, que ha conseguido hacer accesibles los productos financieros a los más pobres e interesar a la banca convencional y los fondos de inversión en esta nueva “industria”.
Todos estos ejemplos muestran el creciente interés de la sociedad por los temas sociales y medioambientales. Esto plantea a las empresas importantes retos y oportunidades, tanto en el diseño de sus productos como en el desarrollo de sus operaciones, si quieren conectar con esas nuevas sensibilidades y responder adecuadamente a un perfil nuevo de “inversor”, que quiere conciliar su motivación financiera y sus intenciones altruistas.
Algunos de los ponentes de la jornada son:
• Manuel Conthe. Presidente de la Comisión Nacional del Mercado de Valores
• Damian Von Stauffenberg. Presidente de Microrate (Washington)
• Juan Luís Martínez. Profesor de Marketing del Instituto Empresa
• José Andrés Barreiro Director de Negocios Globales, BBVA
Programa de la Jornada
Ficha de Inscripción

Max Oliva, Associate Director, Social Impact Management

The Council of Science Editors is organizing a Global Theme Issue on Poverty and Human Development in October 2007. 160 Science journals throughout the world will simultaneously publish papers on this topic of worldwide interest – to raise awareness, stimulate interest, and stimulate research into poverty and human development.
They are planning to publish new original research, review articles, editorials, perspectives, news stories, and other types of articles on the subject of poverty and human development with a common publication or release date of Monday, October 22, 2007.
The invitation is open for other science journals to jump in; if you are interested in joining, you should send an e-mail to the attention of Annette Flanagin.

Recent articles on Bloomberg and Financial Times present the unsustainable growth that has made Spain deserve the nickname Iberian tiger. Whether the growth will decrease softly or lead to a collapse is arguable. J.Pozuelo-Monfort gives some additional color.
Spain has been, with Ireland, the success story in terms of economic growth of the EU over the last 10 to 15 years. But Ireland is different. It is a small country with a population that equals the metropolitan area of Madrid. And most important, it has the lowest corporate rate of the EU at 12.5%, which has mainly driven the headquarters of many corporations.
Spain is the outperformer of the big five nations in Europe. It is the outperformer because of the EU structural funds it has received. It is the outperformer because of the expansion of credit and the real estate boom. And it has created 50% of the employment in the EU in 2006 and 20% of the growth. But there are still many questions. The growth is not sustainable. With a large trade deficit (imports well above exports) and one of the worst productivity growths in the EU, many argue the experienced rates of growth are not sustainable. With debt levels at historical highs and rising interest rates, financial pressure is impacting much of the immigration that has enabled the country to grow at this pace. And fears that many will default are increasing, in view of the subprime fiasco in the United States.
There is no wide consensus as to whether economic growth will slow down softly or suddenly burst, but in any case those who came to Spain to work hard and earn a decent living stand in the most delicate situation.

Max Oliva, Associate Director, Social Impact Management

The Skoll World Forum is taking place today and until this Thursday. I have surfed through the Social Edge website all morning and sadly have not had access to the conferences live, as it was possible last year. Perhaps they will be uploaded later on. In the mean time, there are a couple of blogs available, which are covering the event from their own perspective. Some of the speakers are:
• Jeff Skoll, founder and Chairman, Skoll Foundation and Participant Productions
• Muhammad Yunus, 2006 Nobel Peace Prize laureate, Grameen Bank founder and microfinance pioneer
• Peter Gabriel, musician, activist, cofounder and Chair of WITNESS
• Dr. Larry Brilliant, Executive Director, Google.org, founder and former Director of the Seva Foundation
• Bill Drayton, CEO and Chair, Ashoka
• Jeroo Billimoria, founder, Aflatoun / Child Savings International, who was this past November at the Social Responsibility Day at IE
Free the Children – 2007 Skoll Awardee
The 2007 Skoll Awardees will be presented at this event and include among others, Free The Children, NGO which recognizes the potential of young people to create positive social change. It works with schools throughout North America to educate and empower youths to act locally and globally as agents of change for their peers around the world. More than 500,000 students have joined the organization’s Youth in Action groups in 1,000 schools across the U.S. and Canada. They have shipped $11 million in essential medical supplies and have provided health care projects benefiting more than 505,000 people.
My deepest congratulations to Craig and Marc Kielburger, with whom i had the opportunity to work with back in 1999, at the State of the World Forum.
Have a look at the 2007 Skoll Awardees.

Max Oliva, Associate Director, Social Impact Management

Philipp, Tobias, Guillermo and Blagoja have come up with the grand prize of the Sustainable Innovation Challenge competition at Thunderbird, which challenges the teams to come up with the most innovative solution to a real-world business issue that reflects corporate social responsibility.
“The Thunderbird Sustainable Innovation Summit is a clear recognition that we can no longer separate a business’ financial success from its responsibility to society and the planet,” says Gregory Unruh, director of Thunderbird’s Lincoln Center for Ethics in International Management. “Future business leaders will have to find innovative solutions that create simultaneous value for both the company and the world at large. And there is no better group to challenge than those MBAs from around the world that will have to create and implement ideas for a sustainable and prosperous future.”

German students Philipp Pausder and Tobias Schirmer, Macedonian Blagoja Hamamdziev and Mexican Guillermo Ortega presented their work called “Disruptive Thoughts” to a jury integrated by experts in innovation and CSR, including entrepreneurs, business men, consultants and academics. Among other 85 business schools and 10 finalists, they have won a cash prize of $20,000 as well as the title “2007 Global Champions of Sustainable Innovation”. IE Students won at the same competition last year, which was named Global Citizenship Challenge back then, an outstanding 3rd Place.
“Too often, the tools of innovation are deployed in the pursuit of riches and the cost of failure is seen as simply foregone fortune,” said keynote speaker Michael Raynor of Deloitte Consulting LLP and the bestselling author of “The Innovator’s Solution” and “The Strategy Paradox.” “By injecting the concept of sustainability, this event recognizes that failure has a real cost, and innovators that ‘swing for the fence’ and dismissively accept the cost of ‘striking out’ are taking an irresponsible approach to risk.”
Congratulations to you all!
Take a look at all the Business Schools which took part on the challenge.

Max Oliva, Associate Director, Social Impact Management

You’ve read about The Hub, a space for social innovation. Well, if you live in the Netherlands and want to be part of the Hub Rotterdam, an incubator for social, sustainable innovation, don’t miss the chance!
Starting this Saturday, March 24th, they are arranging a few dates to connect with fellow innovators out in the real world.
“There are still tons of things left to be done at the Hub “building site”…so we are looking for people who would like to lend a hand. You don’t have to be a whiz-kid or technical handyman, anyone can learn! ”
Food, (live) music and fun will be catered for!
They have made a working schedule; if you can make any of the times just send an email to josine@enviu.org
How about the Soweto Hub? Or the Joburg Hub? See these and other hubs in action!

Max Oliva, Associate Director, Social Impact Management

The Research Workshop on Corporate Governance co organized by IE Business School, IESE, CEMFI and Universidad Carlos III had the participation of more than 40 academics from different Spanish universities and research centres. The finance department at IE Business School has made a strong bet on bringing high level scientific debate to the businesses corporate governance.
You can access both the papers from renowned researchers such as Professor Milton Harris (Chicago University, GSB), Professor Kose John (NYU Stern), Professor Colin Mayer (Oxford University, Saïd) and Professor Javier Suárez (CEMFI) as well as the discussions here.
The closing conversation reaffirmed how the reform of the Spanish government in regards to corporate governance, took into account advanced norms from other countries, as well as practical developments derivate from rigorous research, which were adapted to the Spanish reality as well as to the needs from national and international investment funds. If you are interested in further deepening into these discussions, contact Juan Pedro Gomez, Chair of our Finance Department.

Max Oliva, Associate Director, Social Impact Management

The World Resources Institute and the International Finance Corporation have just released “The Next 4 Billion” report.
Based on the works of C.K. Prahalad and his book on “The Fortune at the Bottom of the Pyramid” (which alerted private sector businesses to the importance of the market at the base of the pyramid); this report complements this work, building further on the conversation, providing a quantitative assessment and characterization of BOP markets. Here is an excerpt of their executive summary:
The 4 billion people at the base of the economic pyramid (BOP)—all those with incomes below $3,000 in local purchasing power—live in relative poverty. The wealthier mid-market population segment, the 1.4 billion people with per capita incomes between $3,000 and $20,000, represents a $12.5 trillion market globally. This market is largely urban, already relatively well served, and extremely competitive. On the other hand, this four billion low-income people who live in relative poverty and are underserved, have purchasing power representing a $5 trillion market.

Data from national household surveys in 110 countries show that the BOP makes up 72% of the 5,575 million people recorded by the surveys and an overwhelming majority of the population in Africa, Asia, Eastern Europe, and Latin America and the Caribbean—home to nearly all the BOP.
Striking patterns also emerge in spending. Not surprisingly, food dominates BOP household budgets. As incomes rise, however, the share spent on food declines, while the share for housing remains relatively constant—and the shares for transportation and telecommunications grow rapidly. In all regions half of BOP household spending on health goes to pharmaceuticals. And in all except Eastern Europe the lower income segments of the BOP depend mainly on firewood as a cooking fuel, the higher segments on propane or other modern fuels.
That these substantial markets remain underserved is to the detriment of BOP households. Business is also missing out. But there is now enough information about these markets, and enough experience with viable business strategies, to justify far closer business attention to the opportunities they represent. Market-based approaches also warrant far more attention in the development community, for the potential benefits they offer in bringing more of the BOP into the formal economy and in improving the delivery of essential services to this large population segment.
The full report is available online in downloadable PDF format.
You can access the full report, as well as see all its chapters on PPT presentations.

J.Pozuelo-Monfort, MSc candidate in economic development at LSE

Publicado en El Periódico
Vivimos en un mundo globalizado a la vez que desigual. Un mundo en el que los esfuerzos por reducir la brecha entre ricos y pobres suelen caer en saco roto. Un mundo en el que los esfuerzos por crear las condiciones para que los países que conforman el vagón de cola del capitalismo se suban al tren del crecimiento son esfuerzos que a menudo conducen a resultados poco tangibles, que no suelen eliminar el mal de raíz y solo calman temporalmente los síntomas de una enfermedad, la desigualdad, que hace mella en las poblaciones que habitan las economías en desarrollo. En este contexto, el primer mundo debe corregir, de raíz y sin dilación, los problemas que causan el desequilibrio de riqueza. El lavado de dinero desde el mundo rico y desde el mundo en vías de desarrollo hacia paraísos fiscales es uno de los factores que contribuye a reducir la inversión en las economías por desarrollar y la tasación en los países industrializados, una tasación perdida que en parte debería dedicarse a ayuda al desarrollo.
Resulta sorprendente encontrarse, en el número de The Economist de esta semana, publicidad de firmas que sin tapujos ofrecen sus servicios para realizar un lavado de dinero en paraísos fiscales, sin censura ni por parte de la revista ni por parte del organismo regulador competente. En una época en la que se pone de manifiesto la falta de sensibilidad de determinados anunciantes ante problemas del día a día, no debemos olvidar que la realidad de un mundo desigual únicamente se confirma con anuncios tan poco éticos como los publicados por The Economist.