Capitalists for Inclusive Growth

In 2012, the Pew Research Center found that 85pct of self-described middle-class adults in the United States believe that it is more difficult now than it was a decade ago for people like them to maintain their standard of living. The share of Americans who say that they are in the lower-middle or lower class has risen from a quarter of the adult population in 2008 to around a third today. And Pew’s research found that only 63pct of those surveyed believe that hard work leads to success, down from 74pct in 1999.

These statistics, which represent popular sentiment in the world’s largest economy, should raise significant concerns for governments and business leaders elsewhere, particularly in countries challenged by stagnant growth and rising levels of youth unemployment. Indeed, in January, the IMF revised its near-term outlook for euro zone growth downward, to -0.2pct in 2013. Meanwhile, official data from Spain indicate that the jobless rate rose to 26pct (almost six million people) in the last three months of 2012, the highest figure since the mid-1970’s, with the rate of youth unemployment reaching 55pct.

The need for growth – specifically, the kind of inclusive growth that can provide jobs for the vast number of out-of-work young people and combat rising levels of income inequality – has never been more vital. Nevertheless, today’s debates about how to achieve sustainable, inclusive growth are too narrowly focused on the role of governments and policymakers. The role of the private sector – with its multinational reach, vast piles of cash, and ability to innovate – has been neglected.

There are three main areas to which business should turn its attention if capitalism is to function in a more inclusive way and meet society’s most pressing needs. First, companies should work to overcome skills/jobs mismatches by investing in vocational training and apprenticeships. Companies like Rolls-Royce and British Gas operate impressive apprenticeship schemes that add value for their businesses by creating a pipeline of talented recruits. Other initiatives have been established to scale up these efforts by engaging multiple companies to create entry-level positions for the significant number of young people who are currently unemployed.

Second, just as a collective effort is needed to strengthen the skills of national workforces, so, too, an industry commitment is required to support small and medium-size enterprises (SMEs) as part of the wider business environment. In its 2011 fiscal year, Hewlett-Packard (HP) used more than 600 SMEs in its supply chain in the United Kingdom, representing nearly 10pct of its spending on suppliers. HP aims to increase this share to more than 15pct by the end of 2013 with the addition of a further 150 SMEs, thereby fueling what it rightly regards as the engine of UK economic growth.

Similarly, in March 2012, a consortium of large corporations led by IBM created the web-based Supplier Connection to make it easier for small businesses to become suppliers to large companies. Currently, the members of Supplier Connection purchase more than USD 150 billion in goods and services annually through their global supply chains.

Finally, public corporations must be managed for the long term, and should be rewarded by investors for being more inclusive. For example, Unilever has rejected the short-term pressures of capital markets by ending quarterly earnings reporting and broadening its focus to advance greater social interests, rather than just the interests of its shareholders.

But enlightened companies require enlightened investors. The Ontario Teachers’ Pension Plan is exemplary in its commitment to supporting the best governance practices in the companies in which it invests, and it has reaped large benefits from this approach: the Plan has earned average annual returns of 10pct since its inception in 1990.

The idea that underlies all of these initiatives, and the notion of inclusive capitalism itself, is that companies must be managed for the long term. Companies that follow this approach are concerned with the skills of their future workforce; seek to build loyal and productive supplier bases; and make investment decisions based on sustainable value creation, not short-term profitability.

There is no contradiction between delivering high returns and adopting a long-term approach. Furthermore, as companies begin to adopt these practices, a rising tide will lift all boats: with greater support, SMEs, which currently account for 99pct of businesses and two-thirds of private-sector employment in the European Union, will be able to invest in research and development, and to hire more employees.

In turn, large companies will receive the benefits of faster innovation, rates of youth unemployment will fall, and the hollowing out of the middle class – and its faith in future living standards – will be reversed. It is this type of profoundly positive influence on prospects for shared prosperity and inclusive growth that currently eludes national governments.

Lynn F. de Rothschild

Lynn F. de Rothschild is CEO of E.L. Rothschild and co-chair of the Henry Jackson Initiative for Inclusive Capitalism.


  • Estela

    Unquestionably believe that which you said. Your favorite
    reason appeared to be on the web the simplest thing to be aware of.
    I say to you, I definitely get annoyed while people think about worries
    that they plainly do not know about. You managed to hit the nail upon the top and defined out the whole thing
    without having side-effects , people can take a signal.
    Will probably be back to get more. Thanks

    Estela Monday, 23 October 2017 08:42 Comment Link
  • Maybelle

    Thanks , I have recently been searching for info approximately this subject for a while and yours is the greatest I have discovered till now.
    However, what about the bottom line? Are you positive in regards to the supply?

    Maybelle Tuesday, 17 October 2017 23:51 Comment Link
  • RonaldLex

    cialis cheap prescription
    cialis on line
    buy cialis from australia
    generic cialis 2017
    cialis pills india

    RonaldLex Monday, 16 October 2017 14:07 Comment Link
  • Vicky

    Awesome! Its truly remarkable post, I have got much clear idea concerning from this piece of writing.

    Vicky Monday, 16 October 2017 08:02 Comment Link
  • Davidram

    buy viagra cialis online canada
    tadalafil generic
    cheap cialis in sydney
    cialis tablets
    cheap cialis rx

    Davidram Monday, 16 October 2017 01:43 Comment Link
  • JoshuaErano

    buy cialis overnight
    cialis on line no pres
    buy cialis uk
    cialis canada
    cheap cialis for sale

    JoshuaErano Sunday, 15 October 2017 15:07 Comment Link
  • Val

    Post writing is also a fun, if you be familiar with then you can write or else it is difficult to write.

    Val Sunday, 15 October 2017 01:47 Comment Link
  • Marionmum

    viagra on the cheap
    generic viagra
    efeitos colaterais do viagra 25mg
    generic viagra
    where can you buy viagra uk

    Marionmum Saturday, 14 October 2017 04:13 Comment Link
  • JosephWedge

    viagra pills in india
    buy viagra
    viagra from usa cheap
    buy generic viagra
    can you take nitric oxide and viagra together

    JosephWedge Friday, 13 October 2017 21:06 Comment Link
  • Wilmerlab

    when is generic viagra available
    buy viagra
    generic viagra melt tabs
    cheap viagra
    can u get viagra from your doctor

    Wilmerlab Friday, 13 October 2017 13:55 Comment Link

Leave a comment

Make sure you enter the (*) required information where indicated.Basic HTML code is allowed.

Latest News

Ethiopia to Host the 4th International Coffee Conference

Ethiopia to Host the 4th International Coffee Conference

Ethiopia is set to host the 4th International Coffee Conference from March 6 – 8, 2016 in Addis Ababa at the United Nations Conference Center. Previous conferences were held  in England in 2001, Brazil in 2005 and Guatemala in 2010. Read more


UAE-backed Egyptian forces arrive in Eritrea...

ሰበር ዜና ብሄራዊ ባንክ ከነገ ጀምሮ የብር ምንዛሪ ተመንን በ15% እንዲገሽብ ውሳኔ አስተላለፈ፡፡ በተጨማሪም የገንዘብ ማስቀመጫ ወለድን ከ5% ወደ 7% ከፍ እንዲል ውሳኔ...
Follow EBR News on Twitter

Most Popular

  • 1
  • 2
Prev Next

The White-Box of Ethiopian Agriculture

The agricultural sector remains our Achilles heel, nonetheless, we remain convinced that agricultural-based development remains the only source of hope ...

Read more

For Whoever Has, to Him Shall be Given …

As the Ethiopian government seeks to transform the economy into one that’s rooted in manufacturing, the simplicity for local investors to access finance...

Read more


  • 1
  • 2
  • 3
Prev Next

Shooting in the Dark: The Anomalies of Headhunting

The war for ‘heads’ – also known as talent – has been raging for many years and the manner headhunters ‘poach’ people is getting tougher ...

Read more

Understanding Chinese Investment in Ethiopia A Critical Evaluation of the World Bank’s “Chinese FDI in Ethiopia” Survey

The World Bank country office in Ethiopia, apparently in response to the request by the government of Ethiopia, has conducted a survey of...

Read more

Mitigating Growing Income Inequality: What Needs to Be Done

Rising income and wealth inequality in many countries around the world has been a long-term trend for three decades or more. But the atte...

Read more

View Point

  • 1
  • 2
  • 3
Prev Next

Delivering Life Insurance: The Untapped Market in Ethiopia

Modern insurance transaction in Ethiopia was started by an Egyptian Bank in 1905. According to Ethiopian Chamber of Commerce there were 19, 33 and 40 insuran...

Read more

Cut Throat: The Vicious Cycle of Price Based Competition in Ethiopian Insurance Industry

For most, it was imprecise how Ethiopian insurers would manage their prices devoid of actuaries. As most insurers know, premium has a more significant impact...

Read more

Headache When a Key Personnel leaves a Company in the Financial Sector

The financial sector in Ethiopia has undergone considerable changes in recent decades. The dramatic rise of new market players into the sector has vividly al...

Read more