GW Law Faculty Publications & Other Works Faculty Scholarship
2004
Towards a Typology of Corporate Responsibility in Different Towards a Typology of Corporate Responsibility in Different
Governance Contexts Governance Contexts
Naomi R. Cahn
George Washington University Law School
, ncahn@law.gwu.edu
Anthony Gambino
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Recommended Citation Recommended Citation
Cahn, Naomi R. and Gambino, Anthony, "Towards a Typology of Corporate Responsibility in Different
Governance Contexts" (2004).
GW Law Faculty Publications & Other Works
. 358.
https://scholarship.law.gwu.edu/faculty_publications/358
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Draft: 12/15/04
Towards a Typology of Corporate Responsibility in
Different Governance Contexts
Anthony Gambino and Naomi Cahn
1
Abstract
This paper develops a typology of different country governance contexts, in
which we propose four broad categories of countries in Sub-Saharan Africa. Our analysis
measures the most appropriate methods for helping to create a climate that is receptive to
fostering corporate accountability. Our criteria are based on several different factors,
none of which is determinative: the natural resources of the country; the country’s
dependence on one commodity; the corruption level; the stability and accountability of
the government; the state of civil society; and the existence of ongoing conflict.
Examining these factors together results in measuring not just the country’s receptivity to
change, but also the means for producing change.
At one end of the spectrum, what we label “Category 0” countries, are nations
with economies and governments that are so poorly managed that there is little
multinational investment – sometimes even in the context of lucrative investment
opportunities. At the other end lie those countries with acceptable levels of good
governance, more developed economies and markets, and with, consequently, a
comparatively high level of both domestic and multinational corporate investment. We
1
Tony Gambino was the Mission Director for the United States Agency for International Development in
Kinshasa, Democratic Republic of the Congo, from December 2001-July, 2004. Naomi Cahn is a professor
of law at George Washington University. This paper was presented at the Africa Project Conference of the
GW Institute of International Corporate Governance and Accountability, Oct. 29, 2004.
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examine the appropriateness of strategies to apply external or internal pressure in
different types of countries. Next, we discuss the affects of applying the proposed
intervention strategies to the countries, addressing both short and long-term expected
results. We find that in "Category 0" countries, with extremely low levels of
international investment, strategies should focus on improving governance and overall
human welfare, which often could lead to welcoming international corporate investment.
Other categories of countries, with greater -- and often problematic -- international
corporate involvement, require different types of approaches.
Introduction
The country governance context is critical in deciding on appropriate strategies to
improve corporate responsibility. This paper develops a typology of different governance
contexts, in which we propose four broad categories of countries in Sub-Saharan Africa.
At one end of the spectrum are countries with economies and governments that are so
poorly managed that there is little multinational investment – sometimes even in the
context of lucrative investment opportunities. At the other end lie those countries with
acceptable levels of good governance, more developed economies and markets, and with,
consequently, a comparatively high level of both domestic and multinational corporate
investment. We examine the appropriateness of strategies to apply external or internal
pressure in different types of countries. Next, we discuss the affects of applying the
proposed intervention strategies to the countries, addressing both short and long-term
expected results. The first category of countries, which includes the Democratic
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Republic of the Congo, Liberia, and Sierra Leone, is, in the context of this topic, the least
well understood; therefore, the paper discusses in greater detail the case of one of these,
the Democratic Republic of the Congo (hereafter “DRC”).
Typology
Various entities have developed different means for measuring a country’s growth and
eligibility for investment. The World Bank uses criteria to assess a country’s eligibility
for IDA (International Development Assistance) that focus on per capita income and
creditworthiness for borrowing from both commercial and multilateral institutions and
appropriate performance standards, such as macroeconomic stability and good
governance.
2
These criteria are weighed together; for example, a country with a lower per
capita income than the IDA cut-off may nonetheless be ineligible if it is able to secure
commercial and other multilateral loans.
3
Although the World Bank uses this
classification for eligibility for loans, grants, and special programs of debt relief, other
institutions also rely on these classifications.
4
In sub-Saharan Africa, there are 37
countries that qualify for IDA-status.
5
The World Economic Forum uses a growth competitiveness index based on the
quality of the macroeconomic environment, the state of the country’s public institutions,
2
International Development Association, IDA Eligibility, Terms, and Graduation Policies 1-4 (2001)
(avail. at http://siteresources.worldbank.org/IDA/Resources/Seminar%20PDFs/ida%20eligibility.pdf).
3
Id. at 4.
4
Todd Moss, et al., Double-Standards, Debt Treatment, and World Bank Country Classification: The
Case of Nigeria 2 (2004) (avail. at http://www.cgdev.org/Publications/index.cfm?PubID=147).
5
Id. at 3. Nigeria and Zimbabwe, which are not included in that number, are also IDA eligible, but they
occupy a special “blend” status.
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and the level of its technological readiness.
6
Finally, the United States recently
established the Millennium Challenge Account to provide development assistance to
countries with good governance practices. Among the 16 criteria for eligibility are civil
liberties, control of corruption, immunization rate, inflation rate, fiscal policy, and trade
policy.
7
Among the 16 countries deemed eligible in 2004 were the following sub-
Saharan Africa nations: Ghana, Lesotho, Madagascar, Mali, and Mozambique.
8
There
are additional measures that are more focused on governance, such as the World Bank
Institute’s Aggregate Governance Indicators Dataset, and on political and economic risk,
such as the International Country Risk Guide.
9
While these measures are useful for background information, in our analysis, we
are measuring a country’s suitability not just for the stability of economic investment nor
eligibility for development assistance. Instead, we are examining the most appropriate
methods for helping to create a climate that is receptive to fostering corporate
accountability, a complex analysis that includes legal, social, economic, and political
variables. Our criteria are based on several different factors, none of which is
determinative: the natural resources of the country; the country’s dependence on one
commodity; the corruption level; the stability and accountability of the government; the
state of civil society; and the existence of ongoing conflict. Examining these factors
together results in measuring not just the country’s receptivity to change, but also the
means for producing change.
6
World Economic Forum, Ernesto Hernandez-Cata, Exec. Summary, in Africa Competitiveness Report 1,
3 (2004), avail. at www.weforum.org/pdf/Glob.pdf
.
7
Millennium Challenge Corporation: Reducing Poverty Through Growth, avail. At
www.mca.gov/countries/selection/data/shtml.
8
Eligible Countries, avail. at http://www.mca.gov/countries/eligible/index.shtml.
9
Moss, supra note __, at 12.