FROM COLLUSION TO COLLABORATION? FROM COLLUSION TO COLLABORATION? STATE BUSINESS RELATIONS AND STATE BUSINESS RELATIONS AND ECONOMIC GROWTH IN INDIA ECONOMIC GROWTH IN INDIA KUNAL SEN KUNAL SEN IDPM AND BROOKS WORLD POVERTY INSTITUTE, IDPM AND BROOKS WORLD POVERTY INSTITUTE, UNIVERSITY OF MANCHESTER UNIVERSITY OF MANCHESTER The research findings presented in this The research findings presented in this lecture are available on: lecture are available on: www.ippg.org.uk www.ippg.org.uk
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FROM COLLUSION TO FROM COLLUSION TO COLLABORATION?COLLABORATION?
STATE BUSINESS RELATIONS AND STATE BUSINESS RELATIONS AND ECONOMIC GROWTH IN INDIAECONOMIC GROWTH IN INDIA
KUNAL SENKUNAL SENIDPM AND BROOKS WORLD POVERTY INSTITUTE, IDPM AND BROOKS WORLD POVERTY INSTITUTE,
UNIVERSITY OF MANCHESTERUNIVERSITY OF MANCHESTER
The research findings presented in this lecture are available The research findings presented in this lecture are available on: on:
www.ippg.org.ukwww.ippg.org.uk
What do we understand by What do we understand by effective State Business Relations effective State Business Relations
(SBRs)(SBRs)
“ “a set of highly institutionalised, a set of highly institutionalised, responsive and public interactions responsive and public interactions between the state and the between the state and the business elite” business elite”
Effective vs Ineffective SBRsEffective vs Ineffective SBRs
Effective SBRs are more likely to be Effective SBRs are more likely to be characterised by collaborative and characterised by collaborative and synergistic relations between the state and synergistic relations between the state and the business elitethe business elite
Ineffective SBRs will be more likely to be Ineffective SBRs will be more likely to be characterised by collusive and rent-characterised by collusive and rent-seeking relations between the state and seeking relations between the state and the business elitethe business elite
Two over-arching questionsTwo over-arching questions
Why and how do SBRs matter for Why and how do SBRs matter for economic development?economic development?
What explains the emergence of effective What explains the emergence of effective SBRs? SBRs?
Through the lens of SBRs, we can re-assess Through the lens of SBRs, we can re-assess some big debates in development policy and some big debates in development policy and
thinkingthinking
States versus MarketsStates versus Markets
Market Failure and Government FailureMarket Failure and Government Failure
States versus MarketsStates versus Markets
An early view on the determinants of economic growth An early view on the determinants of economic growth argued that economic growth occurs in contexts where argued that economic growth occurs in contexts where the state respects the property rights of private the state respects the property rights of private producers and where it does not expropriate property or producers and where it does not expropriate property or allows others to do so. allows others to do so. However, as has been witnessed in East Asia, economic However, as has been witnessed in East Asia, economic growth has occurred in contexts where there were strong growth has occurred in contexts where there were strong collaborative relations between the political and collaborative relations between the political and economic elites. economic elites. ‘‘good growth-enhancing relations between business and good growth-enhancing relations between business and government elites are possible’ (Maxfield and Schneider government elites are possible’ (Maxfield and Schneider 1997) 1997)
A developmentally positive relationship A developmentally positive relationship between the state and the marketbetween the state and the market
Two pre-conditions for economic growth:
i. The creation of a positive environment for private investment, in which capitalists have confidence that their activities will be supported and not frustrated by the state
ii. The state has the capability (and willingness) of restraining the negative effects of collusion between individual business people and agents of the state.
Creating the institutional conditions for the maintenance of benign collaboration between agents of the state and business.
Two Views of the State and the Two Views of the State and the Private SectorPrivate Sector
The Predatory State vs the Developmental The Predatory State vs the Developmental StateState
Rent-seeking Business Associations vs Rent-seeking Business Associations vs Developmental Business AssociationsDevelopmental Business Associations
Arms length versus collaborative/’hand in Arms length versus collaborative/’hand in hand’ hand’
Market Failures and Government Market Failures and Government FailuresFailures
Effective SBRs can help prevent both government Effective SBRs can help prevent both government failures and market failures.failures and market failures.
HOW DO THEY PREVENT MARKET FAILURE?HOW DO THEY PREVENT MARKET FAILURE?
They help solve information related market and co-ordination failures They help solve information related market and co-ordination failures (e.g, business associations monitoring their members and ensuring (e.g, business associations monitoring their members and ensuring compliance).compliance).They solve They solve collective actioncollective action problems. problems.
Peak and sectoral business associations that are active, Peak and sectoral business associations that are active, independent of the state and representative of the private sector in independent of the state and representative of the private sector in the region, can resolve many of the collective action problems that the region, can resolve many of the collective action problems that are inherent in developing countries. are inherent in developing countries.
SBRs and Government FailureSBRs and Government Failure
Effective SBRs lead to Effective SBRs lead to credible commitmentcredible commitment on the part of the government to certain policies on the part of the government to certain policies can minimise uncertainties on future policy can minimise uncertainties on future policy actions in the minds of investors. actions in the minds of investors. Creates an institutional environment where the Creates an institutional environment where the state provides state provides high quality public goods high quality public goods that that matter to the private sector such as matter to the private sector such as infrastructure, effective public administration and infrastructure, effective public administration and secure property rights.secure property rights.Check and balance functionCheck and balance function on government tax on government tax and expenditures, and policies.and expenditures, and policies.
Previous literature on SBRs and Previous literature on SBRs and economic growtheconomic growth
Most of the earlier literature on the growth Most of the earlier literature on the growth enhancing effects of SBRs are on East enhancing effects of SBRs are on East Asia, where the bureaucracy has been Asia, where the bureaucracy has been ‘Weberian’ and the disciplining role of the ‘Weberian’ and the disciplining role of the state on capital has been strong. But can state on capital has been strong. But can SBRs be growth enhancing in weaker SBRs be growth enhancing in weaker institutional contexts?institutional contexts?These studies use a case-study approach.These studies use a case-study approach.Here, we use an econometric approach.Here, we use an econometric approach.
India as an empirical contextIndia as an empirical context
The ‘embedded autonomy’ of the developmental state The ‘embedded autonomy’ of the developmental state has been largely absent (Evans 1996).has been largely absent (Evans 1996).While economic growth in India has been strong since While economic growth in India has been strong since the mid 1980s, not all regions in India have benefited the mid 1980s, not all regions in India have benefited equally from the improvement in overall economic equally from the improvement in overall economic performance. performance. States like Andhra Pradesh, Gujarat, Karnataka, Kerala States like Andhra Pradesh, Gujarat, Karnataka, Kerala and Tamil Nadu have grown at a rate of per capita and Tamil Nadu have grown at a rate of per capita income which has exceeded 4.5 per cent per annum income which has exceeded 4.5 per cent per annum during the period. On the other hand, states such as during the period. On the other hand, states such as Assam, Bihar and Madhya Pradesh have grown at Assam, Bihar and Madhya Pradesh have grown at around 2 per cent or less in the same period. around 2 per cent or less in the same period.
Regional variations in institutional Regional variations in institutional qualityquality
India’s federal structure and the significant India’s federal structure and the significant political autonomy and independence in political autonomy and independence in legislative powers enjoyed by state legislative powers enjoyed by state governments, along with regional governments, along with regional variations in the collective strength of the variations in the collective strength of the economic and political elite, has led to economic and political elite, has led to strong variations in the way sub-national strong variations in the way sub-national states interact with the private sector states interact with the private sector (Sinha 2005).(Sinha 2005).
How to identify the effects of SBRs How to identify the effects of SBRs on economic growth?on economic growth?
To understand their effects on growth, we To understand their effects on growth, we need to measure the effectiveness of need to measure the effectiveness of SBRs.SBRs.We need a measure that is time-varying We need a measure that is time-varying and across Indian states to capture the and across Indian states to capture the effects of SBRs both over time and across effects of SBRs both over time and across space (panel data).space (panel data).We need a measure which is based on the We need a measure which is based on the observableobservable features of effective SBRs. features of effective SBRs.
Measuring SBRsMeasuring SBRs
How is the private sector is organised vis-How is the private sector is organised vis-à-vis the public sector?à-vis the public sector?
How is the government is organised vis-à-How is the government is organised vis-à-vis the private sector?vis the private sector?
How are SBRs practiced and How are SBRs practiced and institutionalised?institutionalised?
What mechanisms are there for the What mechanisms are there for the avoidance of harmful collusive behaviour?avoidance of harmful collusive behaviour?
Method of measurementMethod of measurement
Paper by Cali, Mitra and Purohit (CMP), JID, April 2011.Paper by Cali, Mitra and Purohit (CMP), JID, April 2011.Coded qualitative data, obtained from primary surveys Coded qualitative data, obtained from primary surveys and secondary sources.and secondary sources.Most coding in the nature of 0-1, but at different points of Most coding in the nature of 0-1, but at different points of time.time.Used different weighting procedures to obtain sub-Used different weighting procedures to obtain sub-components of SBR measure and aggregate SBR components of SBR measure and aggregate SBR measure.measure.CMP looked at the observable data, and not subjective CMP looked at the observable data, and not subjective perceptions.perceptions.Strength of their measure is the variability over time and Strength of their measure is the variability over time and across states for 16 states for 1970-2006.across states for 16 states for 1970-2006.
The role of the private sectorThe role of the private sectorThe most relevant way in which the private sector can organise itself vis-à-The most relevant way in which the private sector can organise itself vis-à-vis the public sector is via an umbrella or apex business association. vis the public sector is via an umbrella or apex business association. Most Indian states have had apex business associations in existence since Most Indian states have had apex business associations in existence since independence. independence. But there are exceptions, such as Assam where the Federation of Industries But there are exceptions, such as Assam where the Federation of Industries & Commerce of North Eastern Region has been in existence only since & Commerce of North Eastern Region has been in existence only since 1992. There is also more than one apex business association in Assam, 1992. There is also more than one apex business association in Assam, leading to lack of a unified voice for the private sector in their interactions leading to lack of a unified voice for the private sector in their interactions with the state government. This is also the case in Bihar and West Bengal. with the state government. This is also the case in Bihar and West Bengal. However, even in states where business associations have been present, However, even in states where business associations have been present, not all these associations have been active or functioned effectively.not all these associations have been active or functioned effectively. Many associations have not had a web-site or updated their web-site Many associations have not had a web-site or updated their web-site regularly. For example, the Madhya Pradesh Chamber of Commerce and regularly. For example, the Madhya Pradesh Chamber of Commerce and Industry updated its website only once a month. In contrast, the PHD Industry updated its website only once a month. In contrast, the PHD Chamber of Commerce and Industry in Haryana updated its website daily. Chamber of Commerce and Industry in Haryana updated its website daily. Many associations also did not own their office premises.Many associations also did not own their office premises.
The role of the public sectorThe role of the public sectorThe presence of state-owned or state-participated The presence of state-owned or state-participated productive productive corporationscorporations such as Investment Promotion Agencies, Financial, such as Investment Promotion Agencies, Financial, Infrastructure Development and Tourism Development Corporations.Infrastructure Development and Tourism Development Corporations. In many Indian states, these corporations were set up under the initiative of In many Indian states, these corporations were set up under the initiative of a political leader who was strongly in favour of facilitating the growth of the a political leader who was strongly in favour of facilitating the growth of the private sector. private sector. For example, Andhra Pradesh’s sixth state chief minister, Jalagam Vengala For example, Andhra Pradesh’s sixth state chief minister, Jalagam Vengala Rao, who held the post from 1973 to 1978 was widely considered to be pro-Rao, who held the post from 1973 to 1978 was widely considered to be pro-business. It was during this period that the State Finance Corporation and business. It was during this period that the State Finance Corporation and the Andhra Pradesh Industrial Development Corporation was created.the Andhra Pradesh Industrial Development Corporation was created. The proportion of the state budget spent on the industrial sector or The proportion of the state budget spent on the industrial sector or economic services. economic services. For example, the government of Tamil Nadu has spent over an average of For example, the government of Tamil Nadu has spent over an average of 25 per cent of its budget on economic services. In contrast, the government 25 per cent of its budget on economic services. In contrast, the government of Kerala has spent around an average of 13 per cent of its state budget on of Kerala has spent around an average of 13 per cent of its state budget on economic services. economic services.
The interactions between the state The interactions between the state and businessand business
Indian state governments have not had Indian state governments have not had formal institutionalised processes such as formal institutionalised processes such as bilateral or joint economic councils or bilateral or joint economic councils or institutionalised public-private dialogue institutionalised public-private dialogue within which interactions with the private within which interactions with the private sector have taken place. sector have taken place. Rather, the interactions between state Rather, the interactions between state governments and the private sector have governments and the private sector have been typically informal and need-based. been typically informal and need-based.
State-Business interactions– State-Business interactions– Labour RegulationLabour Regulation
One area of concern for the private sector is labour One area of concern for the private sector is labour regulation. Labour laws in India fall under the joint regulation. Labour laws in India fall under the joint jurisdiction of the central and state governments. When a jurisdiction of the central and state governments. When a state government changes a labour law to the benefit of state government changes a labour law to the benefit of workers and make labour markets less flexible, it can be workers and make labour markets less flexible, it can be seen by the owners and managers of private firms that seen by the owners and managers of private firms that the state government is not in favour of private sector the state government is not in favour of private sector growth. growth. We use a measure of labour regulation proposed by We use a measure of labour regulation proposed by Besley and Burgess (2004). In their measure, for Besley and Burgess (2004). In their measure, for example, the government of West Bengal has enacted example, the government of West Bengal has enacted among the most pro-worker set of labour laws. among the most pro-worker set of labour laws.
Taxes are another area of concern for the private sector. State Taxes are another area of concern for the private sector. State governments in India do not have much discretion in setting tax governments in India do not have much discretion in setting tax rates. One set of taxes they do have some discretion over is stamp rates. One set of taxes they do have some discretion over is stamp duty, which is a good proxy for the attitude of the state governments duty, which is a good proxy for the attitude of the state governments towards business establishments and their expansion. towards business establishments and their expansion. Stamp duties in Indian states have been among the highest in the Stamp duties in Indian states have been among the highest in the world. Since the late 1990s, there has been a decrease in stamp world. Since the late 1990s, there has been a decrease in stamp duty rates across several states, in part due to the lobbying of duty rates across several states, in part due to the lobbying of business associations such as the Federation of Indian Chamber of business associations such as the Federation of Indian Chamber of Commerce and Industry (FICCI) and the Confederation of Indian Commerce and Industry (FICCI) and the Confederation of Indian Industry (CII). Industry (CII). However, different Indian state governments have reduced stamp However, different Indian state governments have reduced stamp duties at different rates, suggesting that some state governments duties at different rates, suggesting that some state governments have been more influenced by their interactions with the private have been more influenced by their interactions with the private sector than others. For example, West Bengal had an astronomical sector than others. For example, West Bengal had an astronomical rate of stamp duty of over 20 per cent till 1993 but reduced it to 14 rate of stamp duty of over 20 per cent till 1993 but reduced it to 14 per cent by 1996. per cent by 1996.
Mechanisms to Avoid Collusive Mechanisms to Avoid Collusive BehaviourBehaviour
Collusive behaviour may occur at two levels – first, in the collusion of the Collusive behaviour may occur at two levels – first, in the collusion of the state government with some firms in the private sector, and second, in the state government with some firms in the private sector, and second, in the selective release of policy and investment information by business selective release of policy and investment information by business associations to some of its members to the exclusion of others. associations to some of its members to the exclusion of others. In India, following industrial delicensing first partially in 1985 and then more In India, following industrial delicensing first partially in 1985 and then more completely in 1991, the ‘license raj’ was eliminated, leading to greater completely in 1991, the ‘license raj’ was eliminated, leading to greater competition in most industries. competition in most industries. In this sense, there was likely to be a reduced possibility of collusive In this sense, there was likely to be a reduced possibility of collusive behaviour between state governments and the private sector since the early behaviour between state governments and the private sector since the early 1990s. 1990s. However, there was still a possibility of collusiveness within the private However, there was still a possibility of collusiveness within the private sector if key private sector associations were not releasing information they sector if key private sector associations were not releasing information they were obtaining from the state government and other sources in a timely were obtaining from the state government and other sources in a timely manner to all their members.manner to all their members.Many state level business associations in India have not been proactive in Many state level business associations in India have not been proactive in providing information to their members on a regular basis. providing information to their members on a regular basis. For example, the Associated Chambers of Commerce and Industry of Uttar For example, the Associated Chambers of Commerce and Industry of Uttar Pradesh have not had an annual publication for its members till 1994. Pradesh have not had an annual publication for its members till 1994.
Figure 1: Evolution of the Effectiveness of State Business Relation measure in Indian States, 1985-2006 .3
Estimating the Effects of Estimating the Effects of SBRs on State-level SBRs on State-level Growth in IndiaGrowth in India Dynamic panel data regressions, with 15 states Dynamic panel data regressions, with 15 states
and period: 1985-2004and period: 1985-2004 Year effects: year-specific national level shocks, Year effects: year-specific national level shocks,
e.g. weather shocks and other macroeconomic e.g. weather shocks and other macroeconomic shocksshocks
State specific effects: innate cultural and State specific effects: innate cultural and geographical properties of states that are time-geographical properties of states that are time-invariant. invariant.
Other controls: Demographic factors such as Other controls: Demographic factors such as rural and urban population and the female-rural and urban population and the female-male ratio; literacy rate and per capita male ratio; literacy rate and per capita expenditures on education and health, real expenditures on education and health, real cost of power supply and state-specific cost of power supply and state-specific average rainfall per yearaverage rainfall per year
Reverse Causality Reverse Causality issuesissues We use two sets of instruments:We use two sets of instruments: Land reform implemented under 1949 Indian Land reform implemented under 1949 Indian
Constitution. Each state parliament Constitution. Each state parliament implemented the reform through autonomous implemented the reform through autonomous acts. acts.
Differences in implementation captured by Differences in implementation captured by Besley and Burgess (2000)Besley and Burgess (2000)
States which implemented land reform States which implemented land reform aggressively were likely to be concerned mainly aggressively were likely to be concerned mainly with the rural sector and the rural poor, rather with the rural sector and the rural poor, rather than industrialists. than industrialists.
We would expect the intensity of the land We would expect the intensity of the land reform legislation to be inversely related to the reform legislation to be inversely related to the quality of SBRs. quality of SBRs.
But land reform did not have any significant But land reform did not have any significant effect on the rate of growth.effect on the rate of growth.
Electoral Outcomes as Electoral Outcomes as instruments for SBRinstruments for SBR We exploit the fact that SBRs are the We exploit the fact that SBRs are the
outcome of a political process, with different outcome of a political process, with different groupings in state legislatures (the groupings in state legislatures (the Vidhan Vidhan SabhaSabha) having different propensity to engage ) having different propensity to engage with businesses. with businesses.
We use data from records of the number of We use data from records of the number of seats won by different national parties at seats won by different national parties at each of the state elections under four broad each of the state elections under four broad groupings in line with the classification by groupings in line with the classification by Besley and Burgess (2000). The parties are (i) Besley and Burgess (2000). The parties are (i) Congress Party, (ii) a Congress Party, (ii) a hard left hard left grouping (iii) a grouping (iii) a soft left soft left grouping.grouping.
First Stage FindingsFirst Stage Findings
In line with our priors, land reform legislation (lagged In line with our priors, land reform legislation (lagged two years) appears to be negatively and significantly two years) appears to be negatively and significantly associated with the SBR variable. associated with the SBR variable.
The electoral results variables are also broadly in line The electoral results variables are also broadly in line with the expectations although they are not with the expectations although they are not significant in all cases. significant in all cases.
Congress parties are associated with increasing SBRs, Congress parties are associated with increasing SBRs, while hard left parties are associated with decreasing while hard left parties are associated with decreasing SBRs. SBRs.
On the other hand, soft left and Hindu parties On the other hand, soft left and Hindu parties decrease the SBR measure. decrease the SBR measure.
The lack of significance of the electoral variables The lack of significance of the electoral variables suggests that SBRs are not driven mainly by the suggests that SBRs are not driven mainly by the ideology of the political party. ideology of the political party.
Second stage FindingsSecond stage Findings
The SBR variable is positive and The SBR variable is positive and significant at the 1 per cent level, significant at the 1 per cent level, when we add full set of controls.when we add full set of controls.
A one per cent increase in the A one per cent increase in the SBR measure leads to a three per SBR measure leads to a three per cent increase in long-run growth. cent increase in long-run growth.
Functioning matters, Functioning matters, not the formnot the form The results suggest that the key dimensions of SBRs The results suggest that the key dimensions of SBRs
that stimulate economic growth seem to be those that stimulate economic growth seem to be those related to the actual operations of the interactions related to the actual operations of the interactions between states and businesses.between states and businesses.
On the other hand the formal organisations (both On the other hand the formal organisations (both public and private) in place to favour such interactions public and private) in place to favour such interactions do not seem to matter for economic growth. do not seem to matter for economic growth.
Confirms the arguments made by Atul Kohli, Rodrik Confirms the arguments made by Atul Kohli, Rodrik and Subramanian and Bradford De Long on the role of and Subramanian and Bradford De Long on the role of the ‘attitudinal shift’ of the state in explaining India’s the ‘attitudinal shift’ of the state in explaining India’s growth acceleration at the national level. Our findings growth acceleration at the national level. Our findings suggest a similar story at the sub-national level. suggest a similar story at the sub-national level.
What explains the emergence What explains the emergence of effective SBRs in some of effective SBRs in some contexts and not in others?contexts and not in others? Development ideologies and goals of Development ideologies and goals of
dominant political and economic dominant political and economic eliteselites Relative power of state vis a vis that of Relative power of state vis a vis that of
business elite/sbusiness elite/s Organization of the bureaucracy and Organization of the bureaucracy and
bureaucratic organizationsbureaucratic organizations Form, structure, multiplicity and Form, structure, multiplicity and
representativity of Business representativity of Business Associations (BAs).Associations (BAs).
Formal and informal institutional Formal and informal institutional arrangements linking S and Barrangements linking S and B
Leadership / human agency.Leadership / human agency.
West Bengal vs Andhra West Bengal vs Andhra Pradesh -1 Pradesh -1 West Bengal: ruled by a Left government since 1977West Bengal: ruled by a Left government since 1977 Antagonistic attitude of the state government Antagonistic attitude of the state government
towards central govt and business in the 1980s;towards central govt and business in the 1980s; Signals change in attitude towards business in 1994 Signals change in attitude towards business in 1994
(New Industrial Policy).(New Industrial Policy). Chakravarty and BoseChakravarty and Bose find that very little change in find that very little change in
manuf outcomes – increasing contraction of formal manuf outcomes – increasing contraction of formal manufacturing sector.manufacturing sector.
They trace it to a fractured dominant coalition They trace it to a fractured dominant coalition ambivalent about reforms; an industrial work-force ambivalent about reforms; an industrial work-force still shaped by attitudes of the past towards work still shaped by attitudes of the past towards work and wage bargaining; and a party machinary and wage bargaining; and a party machinary embedded in the promotion of clientelism.embedded in the promotion of clientelism.
Institutional stickinessInstitutional stickiness
West Bengal vs Andhra West Bengal vs Andhra Pradesh -2Pradesh -2 AP: Initial hostility towards business and to AP: Initial hostility towards business and to
manufacturing in the 1950s and early manufacturing in the 1950s and early 1960s. 1960s.
Change in SBR in the mid 1960s with the Change in SBR in the mid 1960s with the emergence of a prosperous rural capitalist emergence of a prosperous rural capitalist class looking for investment opportunities in class looking for investment opportunities in manufacturing. manufacturing.
Leadership played a part: Naidu and the IT Leadership played a part: Naidu and the IT boom.boom.
Credible commitment: Relative similarities Credible commitment: Relative similarities towards business among both main political towards business among both main political parties in the state.parties in the state.
See Alivelu, Srinivasulu and Reddy. See Alivelu, Srinivasulu and Reddy.
ConclusionsConclusions
Developmentally oriented business associations Developmentally oriented business associations along with a responsive state that was credibly along with a responsive state that was credibly committing itself to private sector development committing itself to private sector development were catalysts for synergistic state-business were catalysts for synergistic state-business relations to emerge both at the national and relations to emerge both at the national and sub-national levels since the mid 1980s.sub-national levels since the mid 1980s.
This replaced the rent-seeking and collusive This replaced the rent-seeking and collusive relationships that had characterised state-relationships that had characterised state-business relations in India since the 1970s.business relations in India since the 1970s.
Where such synergistic state-business relations Where such synergistic state-business relations emerged in Indian states, economic growth emerged in Indian states, economic growth followed.followed.
Policy ImplicationsPolicy Implications
Support and broker Support and broker processesprocesses which facilitate good which facilitate good SBRsSBRsMay not be of the Washington Consensus ‘arms May not be of the Washington Consensus ‘arms length’ variety.length’ variety.Donors need to see business associations as agents Donors need to see business associations as agents for development.for development.States need to facilitate the emergence of strong and States need to facilitate the emergence of strong and representative business associations.representative business associations.Support for SBRs should be provided by Support for SBRs should be provided by strengthening the actual practice of SBRs rather than strengthening the actual practice of SBRs rather than by establishing formal organisations to carry out such by establishing formal organisations to carry out such interactions.interactions.
