Business

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Nexus Development Financing. See also Finance for monetary and financial questions on business, personal, and government, international level.

Contents

Fiche

Business organisation An entity formed for the purpose of carrying on commercial enterprise. Such an organization is predicated on systems of law governing contract and exchange, property rights, and incorporation.

Critique against business The rise of modern business provoked relentless criticism. Anthony Trollope featured a fraudulent railway company in “The Way We Live Now” (1875). Upton Sinclair dwelt on “the inferno of exploitation” in Chicago’s meat packing industry in “The Jungle” (1906). Muckraking journalists denounced the titans of American business as “robber barons”. A striking number of business people accepted this hostile assessment. Friedrich Engels used some of the profits of his successful textile business to support Karl Marx, the self-proclaimed gravedigger of capitalism. Henry Frick’s last message to his fellow steel magnate, Andrew Carnegie, was “Tell him I’ll see him in hell, where we both are going.” Many of the greatest business people threw themselves into philanthropy to try to win back the souls that they had lost in making money. Anti-business sentiment is still widespread today. For many environmentalists, business is responsible for despoiling the planet. For many apostles of corporate social responsibility, business people are fallen angels who can only redeem themselves by doing good works.

In the wake of the 2008-9 financial crisis the equity and fairness argument is linked to effects on social cohesion when commenting the quick and large resumption of bank bonuses.

Pro-Knowledge

Private Sector Development

Strengthening value chains, facilitating market linkages, improving the business enabling environment, and building public-private partnerships. Economic corridors approach that works at a transactional level to overcome bottlenecks in an individual firm’s ability to increase sales and meet market demand. Improve association strengthening, land markets, and trade and investment.

Examples

Corporate Social Responsibility

FDI in industry, manufacturing, mining, infrastructure etc. What is the impact? New slavery, environmental disasters, or a means to development? Cf. the effect Chinese FDI and the introduction of mobile phones (infrastructure) has had on development.

CSR must be integrated in the business models. It cannot be seen as charity or add-on - then no seriousness. Anglo-American in Zambia, had CSR projects but then withdraw for "pure" business reasons and CSRs also then disappeared - unfortunate.

Social Entrepeneurs

The concept of Social Enterprise (e.g. focus of Clinton Foundation), working for new approaches to wealth creation and development in e.g. Africa. See Development Policies. Concept of crowd funding or crowd sourcing to harness the internet for grassroot financing. So far investors have put more than $2 trillion into socially responsible investment funds, which weigh both financial returns and societal impact - inscribing investment in a larger social justice agenda -e.g. womens rights. See Gender Studies for e.g. Nike Foundation.

Economic Growth

Nexus of wealth creation. The development community is uncomfortable with the question how to increase the productivity of the populations, societies they are working in, as it is more focus on service provision (indigenous through capacity building or directly through NGOs). Should focus on role of business, innovative funding. See Corporate Social Responsibility and Social Enterprise. Economic activity outside of the government's control should be more than just tolerated: it should be encouraged. A successful example of this is the National Solidarity Program in Afghanistan, an Afghan government initiative that gives block grants to villagers, who then decide, through elected councils, how to spend the money. This program, which stresses accountability has been much more successful than many other development programs in Afghanistan, just because it gives private innovation a chance.

"Growth is not simply a mechanistic composite of statistical indicators. It is in a very real sense an expansion of the imagination. Nobel laureate Robert Lucas "For income growth to occur in a society, a large fraction of people must experience changes in the possible lives they imagine for themselves and their children, and these new visions of possible futures must have enough force to lead them to change the way they behave.""

Eradication of poverty, productive employment, social integration, ageing, crime prevention, disability, drug control, family, indigenous peoples, youth, cooperatives. Will better targeting, marketisation and cash transfers improve the access of the poor in developing countries to basic social services?

In the developing world, the youth bulge seen as a possibility (higher productivity), or a curse (unemployment, social unrest).

Government Responsibility Linkage to Foreign aid effectiveness discourse. "Six decades of cheap well intentioned loans have failed to deliver meaningful development in most parts of Africa. In the financial crisis, blinkered focus on restitution from the developed world risk marginalising the need for African policymakers to be proactive and self-reliant."

Getting women into the economic system Women's unpaid work in the world is 40% of world visible GDP. It is a subsidy to capitalism, and cements inequality.

Micro-financing

See Micro-Financing.

Innovative financing solutions

Internet based crowd funding mechanisms inspired by micro-credit movement

Foreign Direct Investment

Factors that business are concerned about in emerging markets, LICs (low-income countries) : work force education, infrastructure, environment (e.g. for tourism).

There are private contributions to public investment (roads). But risky to a rely on private business to fill holes.

Private Equity Industry, Venture Capital

Problem: Attempts to cultivate high-growth firms, have focused on attracting venture capital and other growth incubators. Such important support mechanisms are, indeed, found in entrepreneurial capitalism, but in advanced economies, they do not help as much as is commonly believed. Less than 16 percent of the fastest-growing U.S. firms in the past decade received any venture capital. In developing economies, such capital sources should not be considered an agent for inducing entrepreneurship. Studies show that it is entrepreneurial activity that creates venture capital, not the other way around.

"International development researchers have often been perplexed by the fact that a program that produces good results in one country may not work in another. They should not be: every situation is different; formulaic approaches cannot work. It is not necessarily true, for example, that an economy needs great infusions of outside capital in order to grow. Start-up ventures do need capital, but the best sources of this capital may differ from one state to another. In poor postconflict countries, few entrepreneurs can finance their own projects, especially if these are ambitious ventures with high growth potential. In those instances, some direct investment from the U.S. military or other U.S. government agencies, preferably working through local lending institutions, may be required. Another possible model is something like the United States' Small Business Innovation Research Program, which makes grants to small firms so that they can develop and commercialize innovative technology. Even for companies that are already growing fast but need financing to continue, venture capital is hardly a one-size-fits-all solution. Venture-capital financing, which is based on investors' ability to cash out quickly, may not be desirable in developing countries. In such places, one should prefer to see local entrepreneurs hold on to their ventures and eventually build iconic homegrown firms, like Infosys and Wipro in India, which not only generate more growth but can serve as examples for other entrepreneurs throughout the country. "

Sir Ronald Cohen of Apax has made an estimated £260m from the industry. Guy Hands of Terra Firma has made an estimated £160m. Damon Buffini, of Permira, is worth an estimated £150m.

Social Minority Investments

Global Trade

Trade for Development?

Business Areas

Energy Technology Business See Energy Conversion, Technology and Chemistry (for battery technologies). ;

http://www.energytechstocks.com/ ; http://www.altenergystocks.com/ ; http://www.climatebiz.com/ ; http://www.suncentricinc.com/resources.html ;

Solar Energy Business

In mid-2009 a certain collapse in demand for solar panels, partly due to financial crisis, partly due to the end of the Spanish subsidy programme.

US Schott, http://www.firstsolar.com/ First Solar ;, SunPower ; Sharp ; Solarworld, — are building, expanding or looking to build manufacturing plants in the United States. Google is financing http://www.brightsolarinc.com/ and http://www.esolar.com/ ;

Asia http://www.suntech-power.com/ Chinese company that is expanding for exports, possibly undercutting western companies on price ; Kyocera ; Changzhou-based Trina secured a critical $300 million loan from a consortium of Chinese banks ; Arizona-based First Solar signed a deal to build the world's biggest solar power plant─in Inner Mongolia.

Sanyo is building a solar wafer factory in Salem, Oregon.

Sumitomo Corp, builds massive solar park in the Canary Islands with Sharp solar panels ;

Mitsubishi has a one-third stake in the world's largest solar power park in Portugal ;

Europe http://www.q-cells.com/en/sustainability/index.html German solar cell company - investment in Mexico possibly, share price collapsed from 100 to 10 euros ; http://uk.finance.yahoo.com/q?s=SWV.DE Solarworld, Frankfurtbörsens största solcellsbolag. Köpt Shells solcellsverksamhet, in line for Vatican solar farm investment, establ. in Oregon, but share price has declined more than 30 percent in two years, to 21.05 euros ($27.80), largely because of slowing demand and a growing number of manufacturers ; http://www.conergy.com/ på konkursens rand de senaste två åren ;

Skyline Solar combines conventional silicon solar cells with reflective parabolic troughs. Skyline Solar has raised $24.6 million to May 2009 and has been awarded $3 million by the Department of Energy to speed up production. It has also installed a pilot power plant that can produce 24 kilowatts of electricity, and has started production of its solar panels with the goal of selling them later this year. They are designed for commercial installations in the 1-to-10-megawatt range, such as on food-processing and water-treatment facilities at the edges of cities or in rural areas. Medium-size solar-power plants at the edges of cities, called distributed utility systems--is the fastest-growing segment of the solar market. http://www.technologyreview.com/business/22582/ ;

Thin Film Solar Sharp is at the forefront. Production ramping up in 2010 ;


Wind Energy Business In China, the Gansu's wind farm, dubbed the Three Gorges Dam on Land, is slated to grow to 20,000 MW by 2020, at an estimated cost of 120 billion Chinese yuan ($17.5 billion). This is one of six national wind power megaprojects approved by the government.

China will reach its 2020 target for wind power in 2010, a decade early, as wind power capacity crests over 30,000 MW, according to the Global Wind Energy Council. By 2020, China is likely to have installed 135,000 MW of wind power capacity, according to analysis by consultancy Emerging Energy Research, based in Cambridge, MA. However, China's grids would need to be smarter and stronger to accommodate the variability of wind energy. In fact, the Global Wind Energy Council says China's underdeveloped transmission system is already an impediment, delaying the start of energy production from new wind farms.

Battery Business Killer application : how to make a reasonably priced battery, with high capacity and short recharging. 8% gains per year due to lithium chemistry changes. For car batteries : Tianjin Lishen Battery Co. ; http://www.a123systems.com/ using nanoscale materials to boost the battery capacity, alliance with Chrysler and SAIC Shanghai ; http://www.boston-power.com/ has the Swing for transportation batteries ; http://www.compactpower.com/ Subsidiary of LG Chem, the Korean company that supplies the Chev Volt batteries ; Nissan and NEC are in partnership to produce batteries for its leaf ;

Clean Car Business

Utility vans http://www.brightautomotive.com/ a startup based in Anderson, IN, unveiled a plug-in hybrid utility van designed to travel 50 miles on half a gallon of gasoline. The company plans to start producing the Idea vehicle in large volume by the end of 2012, and it hopes to sell 50,000 a year starting in 2013 ; http://www.technologyreview.com/business/22549/ Bright will face competition from Ford, which has announced plans for an electric van to be available starting in 2010. Ford has a much bigger marketing budget, and it already has factories to produce the vehicle. Bright will also compete with Smith Electric Vehicles and Azure Dynamics, which makes a hybrid delivery truck.

Pure EV Mitsubishi i-MiEV ; Daimler Smart Fortwo (start production Nov 2009) ;

http://www.codaautomotive.com/ by Miles Ruben, founded Miles Electric Vehicles to which Lishen produced batteries ; http://www.teslamotors.com/ Roadster and Model S by Elon Musk ; http://www.nissanusa.com/leaf-electric-car/ 80kW / 160 km ;

http://www.byd.com/ BYD is looking to leap into electric cars with "novel" battery technology in the electrodes which should make batteries cheaper. Warren Buffet has 10% share in BYD.

Pure EV with swapping of batteries Championed by Better Place in Israel, Australia, Denmark ; Nissan ; Tesla ;

Parallel HEV Perhaps older technology as petrol engine is driving wheels as well. Toyota Prius (80% of hybrid market 2009) ; Honda Insight ;

Series HEV Most major car makers are in the process of producing these ; http://gm-volt.com/ ; Daimler BlueZero ;

HEVs, parallel or series, will surge from 1% of total world demand to perhaps 13% in 2020 (JP Morgan).

Train Transport Business

Kawasaki Heavy Industries (Japanese, exporting trains) ; Hitachi Consortium $10 Billion contract in the UK ; China will expand by $700B its network by 2020 ; Siemens ; Bombardier ; Alstom ;

Nabtesco Group (producing train brakes and sliding doors to trains in JP) ;

B2B

http://www.Alibaba.com and Ma's consumer-auction website, http://www.Taobao.com, did so well that in 2006, eBay shut down its own site in China.

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