SPECIAL FEATURE
A dissenting voice: “The ‘Billions to Trillions’ Charade” The Indian economist Jayati Ghosh argues that successful crowding-in of the private
mechanisms, and regulations to curb monopolistic and anticompetitive behaviour.” The economist acknowledges the power of the private sector: Redirecting just one percent of the privately held worldwide financial assets worth US$470 trillion toward climate and development initiatives would be more than enough to meet even the highest estimates. But to avoid a situation where the public sector takes all the risk, the taxpayer becomes the lender of last resort and the private sector has the option to rake in the profits when things go well and to walk away when things go wrong, Ghosh advocates a “carrot and stick”-approach. “It is time to move beyond the hollow ‘billions to trillions’ mindset and ensure that the billions we do have are spent wisely,” she writes.
sector largely depends on creating a conducive environment: “Historically, private investors have relied on the public sector to finance infrastructure projects and riskier, less profitable ventures. If governments and international institutions remain resource-constrained, it is highly unlikely that private entities will step in to bridge the gap,” she writes in an opinion piece published on the “Project Syndicate”-platform in May. Ghosh, who is Professor of Economics at the University of Massachusetts Amherst, USA, also sees a second issue: “The problem is compounded by the di ffi culty of ensuring that private entities fulfil their commitments. The prevailing approach involves o ff ering incentives, such as subsidies and risk underwriting, but not at the same time establishing clear conditions, enforcement
Jayati Ghosh
Jayati Ghosh, Professor of Economics at the University of Massachusetts Amherst, USA, is a member of the Club of Rome’s Transformational Economics Commission and Co-Chair of the Independent Commission for the Reform of International Corporate Taxation. Learn more here: https:// www.umass.edu/social-sciences/ about/directory/jayati-ghosh
In conclusion
Transparent and accountable regulatory processes enhance governance and transparency, reducing opportunities for corruption, rent-seeking and regulatory capture. Open and inclusive decision- making processes build trust among stakeholders, foster public confidence and facilitate constructive dialogue between governments, businesses, civil society groups and communities a ff ected by development projects. Regulatory frameworks provide legal certainty and mechanisms for resolving disputes between private investors, government agencies and other stakeholders. Clear rules, property rights, contract enforcement and access to impartial judiciary or arbitration mechanisms mitigate investment risks, protect investor rights and uphold the rule of law, fostering a conducive environment for sustainable economic development.
Establishing clear regulatory frameworks that incentivize private sector investment while safeguarding public interests is crucial for unlocking the potential of private capital to drive inclusive and sustainable development. By creating an enabling environment that promotes investment, fosters competition, protects rights and promotes responsible business conduct, governments can harness the power
Enhancing governance and transparency
of the private sector to address development challenges and achieve shared prosperity.
Ensuring legal certainty and dispute resolution
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