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UnitedNations

ESCAP/CTIEBI(1)/6

EconomicandSocialCouncil

Distr.:General

14December2022

Original:English

*ESCAP/CTIEBI(1)/1/Rev.1.

B22-01208(E)TP100123

EconomicandSocialCommissionforAsiaandthePacific

CommitteeonTrade,Investment,EnterpriseandBusinessInnovation

Firstsession

Bangkokandonline,22–24February2023

Item5oftheprovisionalagenda*

Enablingbusinessinnovationforinclusiveandsustainable

development

Enablingbusinessinnovationforinclusiveand

sustainabledevelopment

Notebythesecretariat

Summary

TheSustainableDevelopmentGoalshavecontributedtotransforminghowbusinessesoperate.Corporationsarebeginningtorealigntheirprioritiesinthefaceofshiftingdemandsfromconsumers,investorsandemployees.Inaddition,innovativebusinessmodelssuchassocialenterprisesandinclusivebusinessesareemerging,whichpurposefullyaimtoaddresssocialandenvironmentalchallengesthroughmarket-basedapproachesandtoprovidelivelihoodopportunities,productsandservicestothoseatthebaseoftheeconomicpyramid.

GovernmentsintheAsia-Pacificregionhavespearheadedpoliciestoenablesuchbusinessinnovations.Thepresentdocumentprovidesanoverviewofemergingpolicyoptionstopromotebusinessinnovationforinclusiveandsustainabledevelopment,drawingfrompoliciesandpracticesimplementedbymemberStatesoftheEconomicandSocialCommissionforAsiaandthePacific.

Inaddition,thepresentdocumenthighlightstheimportantrolethatregionalcooperationandSouth-Southcollaborationplayinpromotingbusinessinnovationforinclusiveandsustainabledevelopment.

TheCommitteeonTrade,Investment,EnterpriseandBusinessInnovationmaywishtoshareexperiencesrelatedtonationalandregionalcooperationandSouth-Southcollaboration,includingeffectivepracticesandlessonslearned,inpromotingbusinessinnovationforinclusiveandsustainabledevelopment.

TheCommitteemayalsowishtoindicatethesupportrequiredfromthesecretariattopromotetheagendaonenablingbusinessinnovationforinclusiveandsustainabledevelopment;makerecommendationstothesecretariatonadvancingbusinessinnovationforinclusiveandsustainabledevelopment,bothnationallyandregionally;andidentifynewandprioritypolicyissuesrelatedtobusinessinnovationforinclusiveandsustainabledevelopmentthatthesecretariatshouldaddressingreaterdetail.

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I.Introduction

1.BusinesshasbeenasourceofinnovationandeconomicdynamismintheAsia-Pacificregion.However,toachievetheSustainableDevelopmentGoals,innovativegovernmentpoliciesthatincentivizebusinessestofocusoncreatingsocialandenvironmentalvalue,aswellaseconomicvalue,areurgentlyrequired.

2.Inresponsetothischallenge,innovativebusinessmodelsandpractices

–suchassocialenterprisesandinclusivebusinesses–areemerging.Theycanbedefinedasbusinessmodelsandpracticesthataimtogeneratesocialandenvironmentalimpacttogetherwitheconomicreturn.

3.GovernmentsintheAsia-Pacificregionhavespearheadednationalpolicyinnovationtopromotesocialenterpriseandinclusivebusiness.Fortheveryfirsttime,memberStatesoftheEconomicandSocialCommissionforAsiaandthePacific(ESCAP)agreed,inCommissionresolution73/9,tosupportthedevelopmentofenablingenvironmentsforsocialenterpriseasoutlinedintheregionalroadmapforimplementingthe2030AgendaforSustainableDevelopmentinAsiaandthePacific.Inaddition,StatesmembersoftheAssociationofSoutheastAsianNations(ASEAN)endorsedtheGuidelinesforthePromotionofInclusiveBusinessinASEAN.

4.Thepresentdocumentcontainsanoverviewofemergingpolicyoptionstopromotebusinessinnovationforinclusiveandsustainabledevelopment,drawingfrompoliciesimplementedbymemberStatesofESCAP.Inaddition,thepresentdocumenthighlightstheimportantrolethatregionalcooperationandSouth-Southcollaborationplayinpromotingbusinessinnovationforinclusiveandsustainabledevelopment.ThedocumentalsoprovidesanoverviewoftheworkofthesecretariatonthisagendaandincludesaproposalonissuesforconsiderationbytheCommitteeonTrade,Investment,EnterpriseandBusinessInnovation.

II.Keyconcepts

5.Innovationisnotjustabouttechnology.Itcanbedefinedastheimplementationofaneworsignificantlyimprovedproduct(goodorservice)orprocess,anewmarketingmethodoraneworganizationalmethodinbusinesspractices,workplaceorganizationorexternalrelations.1Inaddition,socialinnovationcanbedefinedastheprocessofdevelopinganddeployingeffectivesolutionstochallengingandoftensystemicsocialandenvironmentalissues.2

6.Withthesedefinitionsinmind,andinthecontextofthe2030Agenda,businessinnovationforinclusiveandsustainabledevelopmentcanbedefinedasaneworsignificantlyimprovedbusinessmodelaimedatdevelopinganddeployingeffectivesolutionstosocialandenvironmentalissues.

1OrganisationforEconomicCo-operationandDevelopment(OECD)andEurostat,OsloManual:GuidelinesforCollectingandInterpretingInnovationData(Paris,2005).

2StanfordGraduateSchoolofBusiness,CentreforSocialInnovation,“Definingsocialinnovation”.Availableat

/faculty-research/centers-

initiatives/csi/defining-social-innovation

(accessedon25November2022).

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7.Socialenterpriseandinclusivebusinessaresubsetsofbusinessinnovationandcanbedefinedasfollows:

(a)Asocialenterpriseisabusinessthatgeneratesrevenueinordertoaddresssocialandenvironmentalproblems;

(b)Aninclusivebusiness3isonethatprovidesgoods,servicesandlivelihoodsonacommerciallyviablebasistopeoplelivingatthebaseoftheeconomicpyramid,makingthemacorepartofthevaluechainassuppliers,distributors,retailersorcustomers.

8.Collectively,thesetwoconceptshavebeenreferredtoasimpactenterprises,whichcanbedefinedasfinanciallyself-sustainableandscalableventuresthatareactivelymanagedwithaviewtoproducingsignificantnetpositivechangesinthewell-beingofunderservedindividuals,thecommunitiesinwhichtheydobusinessandthebroaderenvironment.4Impactenterprisesformpartofthebroaderemergingconceptoftheimpacteconomy,whichcanbedefinedasasysteminwhichinstitutionsandindividualsgiveequalprioritytosocialimpactandfinancialimpactwhenmakingdecisionsabouthowtoallocateresources.5Animpacteconomyisthusaverydifferentkindofsystemfromatraditionalcapitalisteconomythatprioritizesonlyfinancialreturns.

III.Policyoptionstopromotebusinessinnovationfor

inclusiveandsustainabledevelopment

9.Governmentscansupportbusinessinnovationforinclusiveandsustainabledevelopmentinmanyways.Thepresentsectioncontainsanoverviewofexistingpolicytools,groupedintothreecategoriesbasedonthefollowingrolesofgovernment(seefigure):

(a)Amarketfacilitator,whichcreatesstrategiesandorganizationsthatenableactors;

(b)Amarketregulator,whichimplementslawsthatenable,support,andincentivizeactors;

(c)Amarketparticipant,whichtakespartinmarketexchangesbyprovidingimpactcapitalorsourcingfromimpactenterprises.6

3Groupof20DevelopmentWorkingGroup,“G20inclusivebusinessframework”

(2015).

4CatherineH.Clarkandothers,“Acceleratingimpactenterprises:howtolock,stock,andanchorimpactenterprisesformaximumimpact”,SJFInstituteandDukeUniversityFuquaSchoolofBusiness,May2013.

5DavidFineandothers,“Catalyzingthegrowthoftheimpacteconomy”,McKinseyandCompany,5December2018.

6OECD,SocialImpactInvestment2019:TheImpactImperativeforSustainableDevelopment(Paris,2019).

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Marketfacilitator

Nationalstrategies

Dedicatedcentralunits

Marketregulator

Specificlegalforms

Fiscalincentives

Marketparticipant

Accesstocapital

Impactprocurement

Impacteconomypolicytoolbox

Rolesofgovernment

Source:ESCAP,basedontheframeworkdevelopedinpartnershipwiththeGlobalSteeringGroupforImpactInvestment.

A.Marketfacilitator

10.Asmarketfacilitators,Governmentscandevelopstrategiesandcreateorganizationsthatsupport,enableandincentivizethegrowthoftheimpacteconomy.IntheAsia-Pacificregion,Governmentshaveusedseveralpolicytoolsinthisregard,includingthefollowing:

(a)Nationalstrategiesthatprovideaframeworkforthedevelopmentofimpacteconomies;

(b)Dedicatedcentralunitstoserveasexpertcentres,withinnationaladministrationstructures,foroversightandimplementationofimpacteconomypolicies.

1.Nationalstrategies

11.SeveralGovernmentsintheAsia-Pacificregionhaveorareintheprocessofdevelopingnationalstrategiestoguideandshapeprogressonbusinessinnovationforinclusiveandsustainabledevelopment.SomeGovernmentshavedevelopedspecificstand-alonestrategiestosupportsocialenterprises,includingtheGovernmentsoftheRepublicofKorea(SocialEnterprisePromotionAct),Thailand(SocialEnterprisePromotionAct),VietNam(LawonEnterprise)andMalaysia(SocialEnterpriseBlueprint2015–2018).Thesestrategiestypicallyincludearangeofsupportivemeasuressuchascapacity-building,fiscalincentives,incubationfacilities,marketlinkageservicesandcertificationforimpactenterprises.

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12.Governmentsarealsoputtinginplacespecificstrategiesorprogrammestopromoteinclusivebusiness.Asanexample,theGovernmentofCambodiaintegratedinclusivebusinesspromotioninitsNationalStrategicDevelopmentPlan2019–2023,anditdevelopedtheInclusiveBusinessEnablingEnvironmentstrategyforCambodia.Thestrategyservestopromoteinclusivebusinessthroughnineactionareasthatincludeapprovinganinclusivebusinessstrategyandactionplan;developinganinclusivebusinesscoachingfacility;settingupaninclusivebusinessriskreductionfundtoencourageinclusivebusinessinvestors;andestablishingareportingsystemformonitoringandevaluatinginclusivebusinessimpact.In2021,Cambodiabegantheimplementationofthestrategy.TheGovernmentestablishedtheinclusivebusinesspromotionactionplan,accreditedthefirstinclusivebusinessesandgaveawardstoinclusivebusinesses.

13.OtherGovernmentshavetakenadifferentapproachtostrategydevelopmentwithregardtobusinessinnovationforinclusiveandsustainabledevelopment.Forexample,insteadofhavingastand-alonestrategyforsocialenterprisedevelopment,theGovernmentofIndonesiahasmadesocialentrepreneurshipapillarofitsfive-yearnationalplan.InMalaysia,thenationalentrepreneurshippolicyfor2030includesthepromotionofinclusivebusinesses.Followingtheelaborationofalandscapestudy,Malaysiaissupportinginclusivebusinesswithinitsworkonpromotingsmallandmedium-sizedenterprisedevelopment.Forexample,in2022,SMECorporationMalaysiaestablishedtheInclusiveBusinessValueChainDevelopmentInitiativetosupportselectedinclusivebusinessmodels.Asanotherexample,in2022,thePrimeMinisterofVietNamapprovedtheprogrammeonsupportforprivateenterprisesinsustainablebusinessfor2022–2025,whichincludesthepromotionofinclusivebusinessmodelsandcirculareconomy-basedbusinessmodels.

2.Dedicatedcentralunits

14.Theaimofdedicatedcentralunitsistoensurethatpoliciesandstrategiesareimplementedconsistentlyforallpolicyfunctionsandtoserveasafocalpointforbothpublicandprivateactors.Centralunitsexistmostlyincountrieswithanationalstrategyinplace.

15.Forexample,theSocialEnterprisePromotionActof2006promotessocialenterprisesintheRepublicofKorea,andtheKoreaSocialEnterprisePromotionAgency7wassetupasadedicatedgovernmentagencytooverseetheimplementationoftheAct.TheAgencyfocusesonthefollowingareas:

(a)CertificationofsocialenterprisesaccordingtocriteriaoutlinedintheAct,grantingthemaccesstoawiderangeofbenefits,andmonitoringandevaluationoftheseenterprises;

(b)Capacity-buildingforsocialenterprises,includingprofessionalservices,specializedtrainingcoursesthroughtheSocialEntrepreneursAcademy,incubationsupportandsocialventurecompetitions;

(c)Supportingsocialenterprisesbyofferingfinancialincentives,includingawagesubsidyfordisadvantagedorunderprivilegedpeople,reducedcorporationtaxes,taxbreaksforcorporatepurchasesofsocialenterprisegoodsandservices,long-termlowinterestloansandpreferentialpublicprocurementpolicies;

7See

www.socialenterprise.or.kr/_engsocial/.

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(d)Encouraginglocalgovernmentstosupportthenationalstrategy,asinthecaseofSeoul,forexample,wherethemetropolitangovernmenthasimplementeditssocialeconomypolicyandsocialenterprisesupportplantoprovidecomprehensivesupportforsocialenterprisesthroughbusinessservices,publicprocurement,education,incubationandsocialeconomiczones.

16.Asanotherexample,inCambodia–tosupporttheimplementationoftheInclusiveBusinessEnablingEnvironmentstrategy–aninstitutionalframeworkhasbeenestablished.Theframeworkcomprisesaninclusivebusinessboardtoprovideguidance;aninclusivebusinessunitintheMinistryofIndustry,Science,TechnologyandInnovationtoserveasthesecretariatoftheboard;andfocalpointsinfivegovernmentagenciesandfourbusinessassociations.

B.Marketregulator

17.Governmentscanbuildanenablingenvironmentfortheimpacteconomybyintroducingfavourablelawsandregulations,includingthefollowing:

(a)Specificlegalformstoenableimpact-focusedenterprisestoregisterandbedistinguishedfrommainstreambusinesses;

(b)Fiscalincentivestoprovidetaxbreaksforimpactenterprises.

1.Specificlegalforms

18.SeveralGovernmentshavedefinedspecificlegalrequirementswhichbusinessesmustmeetinordertobeabletoregisterassocialenterprises.VietNamwasthefirstcountryinSouth-EastAsiainwhichsocialenterpriseswererecognizedasdistinctlegalentities.IntheRepublicofKorea,aspecificlegalformwasintroducedintheSocialEnterprisePromotionAct.TheGovernmentofThailandpassedaSocialEnterprisePromotionActinwhichcriteria,asopposedtoalegaldefinition,areusedtodistinguishsocialenterprisesfrommainstreamones.

19.SomeGovernmentshaveputofficialaccreditationschemesinplacetocertifysocialenterprisesthatfulfilthelegaldefinitionandaccompanyingcriteria.ThesespecialregistrationandcertificationschemesallowGovernmentstograntbenefits,suchasfiscalincentivesorpreferentialprocurement.Forexample,theImpactDrivenEnterpriseAccreditation,conductedbytheMalaysianGlobalInnovationandCreativityCentre,providesbenefitssuchasanincometaxdeduction.

20.OtherGovernmentsareputtinginplaceaccreditationschemestorecognizeinclusivebusinessmodels.CambodiahasestablishedaninclusivebusinessaccreditationsystembasedontheregionalGuidelinesforthePromotionofInclusiveBusinessinASEANandhasalreadyaccreditedafirstbatchof18enterprises.VietNamiscurrentlyintheprocessofestablishinganaccreditationsystemforinclusivebusiness.

21.OtherGovernmentshaveimplementedmoreinformalinitiatives,suchasawards,torecognizeimpactenterprises.Forexample,theMinistryofIndustry,Science,TechnologyandInnovationofCambodiahasnamedatleast

10localcompaniesaschampionsofwhatisknownastheInclusiveBusiness

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EnablingEnvironmentforCambodiamodel.8AttheASEANlevel,theASEANInclusiveBusinessAwardsareprovidedtorecognizeinnovativebusinessmodelsineachASEANmemberState.

2.Fiscalincentives

22.SeveralGovernmentshaveusedfiscalincentivestospecificallybenefitimpactenterprises.Forexample,in2016,theGovernmentofThailandpassedtheRoyalDecreeonTaxExemptiontoprovidetaxbenefitstosocialenterprisesaswellastoinvestorsinsuchenterprises.TheDecreeincludesfinancialincentivesforbothsocialenterprisesandorganizationsthatinvestinsocialenterprises.Italsoincludesarequirementthatsocialenterprisesallocate

70percentoftheirprofitstosocietyorinvestinsocialenterprisebusinesses,withshareholderdividendscappedat30percentofprofits.Firmsthatinvestinordonatetosocialenterpriseswillalsobealloweda100percentdeductiononcorporateincometax,financialaidforstartingbusinesses,aninterestratesubsidy,andresearchanddevelopmentsupport.9

23.Withregardtoinclusivebusiness,thePhilippineswasthefirstcountryintheworldinwhichaspecificpolicyforpromotingthesectorwasadopted.Since2017,registeredinclusivebusinesseshavebeeneligibleforfiscalandnon-fiscalincentives.Theincentivesareaimedatbusinessesintheagribusinessandtourismsectors.10

C.Marketparticipant

24.Governmentscanalsostrengthentheimpacteconomyasmarketparticipants.Theycandothisbythefollowingmeans:

(a)Providingaccesstocapital,throughprogrammesand

government-runfunds,toimpactenterprises;

(b)Embeddingsocietalandenvironmentalconsiderationsinpublicprocurementdecisions.

1.Accesstocapital

25.SeveralGovernmentshaveexistinginitiativesandpoliciestoprovideaccesstocapitalforimpactenterprises.Theseinitiativesincludegovernment-backedimpactinvestmentfundsandcreditguaranteeprogrammes,amongothers:

(a)Therearefewexamplesofgovernment-backedimpactinvestmentfunds,asmostofthemaremanagedbytheprivatesector.However,onesuchexampleistheSamridhiFundinIndia.TheSmallIndustriesDevelopmentBankofIndiahassetupthis$55millionsocialventurefundtoprovidegrowthcapital,intheformofequityorequity-linkedinstruments,tocompanieswithdevelopmentimpactineightstates;11

8KhmerTimes,“10companiesreceivespecialrecognition”,12May2020.

9ChatrudeeTheparat,“Draftbillonsocialfirmsapproved”,BangkokPost,11July2018.

10ASEAN,“Outcomereport:secondASEANInclusiveBusinessSummit”,

1November2019.

11

www.sidbiventure.co.in/samridhi_fund.html

.

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(b)Creditguaranteeprogrammesallowsocialenterprisesaccesstoloansunderpreferentialconditions,withthefundersprovidingguaranteestocoverthedefaultriskoftheborrowers.Socialenterprisesoftenfinditchallengingtoaccessconventionalbankloans,astheyareunabletoprovidethekindofcollateralrequired.Forexample,theKoreaInclusiveFinanceAgencyprovidesguaranteesforloansworthupto$7millionforfirmsworkingonsocialissues.12TheprovincialgovernmentofShanxiandtheGovernmentofChinaarealsoguaranteeingasovereignloanof$100millionissuedbytheAsianDevelopmentBanktofinancetheShanxiIntegratedAgricultureDevelopmentProject.Theaimoftheprojectistocreate20,000newjobsforpoorandlow-incomepeoplebysupportinginclusivebusinesses.13

2.Impactprocurement

26.SeveralGovernmentshavesupportedimpactenterprisesandembeddedsocialvalueinpublicprocurementdecisionsbyprocuringfromimpactenterprisesorintegratingsocialandenvironmentalmetricsintoprocurementprogrammes.

27.Forexample,underthe“MakeinIndia”policy,a“Zerodefectzeroeffect”certificationforproductsandserviceswasintroduced.Thecertificationincludesparametersonminimalnegativesocialandenvironmentaleffects.EnterpriseswiththiscertificationareclassifiedaspreferredsellersintheGovernmente-marketplace,thecountry’se-procurementportalforpublicagencies.InSingapore,undertheNationalEnvironmentAgencyAct2002,minimumenergyperformancestandardsandamandatoryenergylabellingschemeforcertainelectricalapplianceswereintroduced.Thesestandardsarebeingusedasareferenceforimplementinggreenpublicprocurementmeasures.

28.InSeoul,a2014municipalordinanceonincreasingthesocialvalueofpublicprocurementservestopromotepreferentialpurchaseofgoodsorservicesproducedbysocialenterprises.Theordinancealsoservestosupportsocialenterpriseswithregardtobusinessimprovementandproductandservicedevelopment.14

IV.RegionalcooperationandSouth-Southcollaboration

29.RegionalcooperationandSouth-Southcollaborationwillbecriticalinpromotingthebusinessinnovationforinclusiveandsustainabledevelopmentagendamorebroadlyandscalingupthenewwaveofbusinessesputtingpurposealongsideprofit.IntheAsia-Pacificregion,thebenefitofthisapproachisalreadybearingfruit.

30.In2020,ASEANEconomicMinistersendorsedtheGuidelinesforthePromotionofInclusiveBusinessinASEAN.TheGuidelinesarebasedonthepolicyexperienceofthePhilippines;thefindingsoflandscapestudiesconductedinCambodia,Indonesia,MalaysiaandVietNam;andtheoutcomesofaseriesofpolicydiscussions.

12KoreaBizwire,“Gov’ttoboostpolicysupportforsocialimpactinvestments”,

4April2018.

13AsianDevelopmentBank,InclusiveBusinessMarketScopingStudyinthePeople’sRepublicofChina(Manila,2018).

14EunaeLee,StatusofSocialEconomyDevelopmentinSeoul:ACaseStudyofSeoul(Seoul,GlobalSocialEconomyForum,2016).

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31.TheGuidelinesinclude12policyinstrumentsforpromotinginclusivebusiness.Theseinstrumentsincludeestablishingastrategyandinstitutionalsupportforthepromotionofenablingenvironmentsforinclusivebusiness;supportinggreaterrecognitionforfirmsthatgobeyondthebottomlinethroughthegivingofbusinessawards;and,moreimportantly,establishinganaccreditationsystemthatcanpotentiallybelinkedtobenefitsofafinancial(taxincentives)andnon-financial(priorityinprocurementandfacilitationservices)nature.TheGuidelinesarealsoaimedatencouragingGovernmentstosetupabusinesscoachingfacilitythatprovidesspecializedbusinessadvicetofirmsseekingtotransformtheirbusinessintoaninclusivebusinessorexpandtheirinclusivebusinessmodel.Toensurethatfirmshaveaccesstothenecessaryfinancetoinvestininclusivebusinessmodels,andrecognizingtheavailabilityofimpactfunding,theGuidelinesincludeaproposalfortheestablishmentofarisk-reductionfacilitythat,byprovidingcertainprotectionforinvestments,wouldhelpreducetheriskforinvestorsandleveragefurtherprivateinvestmentsintoinclusivebusinessmodels.ItisnotedintheGuidelinesthatthepromotionofinclusivebusinesscanalsobeincorporatedintoexistingprivatesectordevelopmentprogrammes.Itisalsosuggestedthatmeansofpromotinginclusivebusinessmodelswithinprogrammesforsmallandmedium-sizedenterprisedevelopmentandsocialenterprisesbeexplored.TheendorsementofsuchGuidelinesattheregionallevelhaveprovidedlegitimacyforgovernmentofficialsseekingtopromoteinclusivebusinessintheirowncountries.

32.South-Southcollaborationisalsocriticalforeffectivelypromotinginnovativebusinessmodelsatscaleasdevelopingcountries,asawhole,haveasubstantiveandincreasingeconomicimpact.CountriesintheglobalSouthhavecontributedtomorethanhalfofallglobalgrowthinrecentyears,andnewfinancialinstitutionshavehelpedgenerateinfrastructureandsustainabledevelopmentprojectsaroundtheworld.Moreover,therearemanycreativehome-grownsolutionstoeradicatepovertyandachievetheSustainableDevelopmentGoals,andimportanteconomic,geographicalandculturallinkages,aswellassharedandcommonchallengesandopportunities,thatmakeSouth-Southcollaborationaveryvaluableproposition.

33.South-Southcollaborationhasplayedacrit

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