Author Archives: Marc Schleifer

Remembering Ronald Coase


The world was saddened this week by the passing of Ronald Coase, who won a Nobel prize for his groundbreaking work providing clarity and insight on a range of questions of economic behavior. His paper The Nature of the Firm looked at why people would choose to create firms rather than be individual market participants, introducing the concept of transaction costs to economic theory. His later study of transaction costs in the context of externalities, in The Problem of Social Cost, informs many of the ideas underpinning CIPE’s work.

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Afghanistan and Pakistan Seek Greater Economic Cooperation

The Afghan-Pakistan border. (Photo: EPA)

The Afghan-Pakistan border. (Photo: EPA)

While most of the coverage of today’s summit meeting in Islamabad between Pakistan’s Prime Minister Nawaz Sharif and Afghan President Hamid Karzai focused on crucial issues of security and the peace process, the two leaders also covered one of the key drivers of long-run regional stability: enhanced trade and economic relations between the two countries.

According to press reports, the sides discussed cooperation on infrastructure, power, and transportation projects. In particular, Pakistan promised to follow through on its pledges under the Afghanistan-Pakistan Transit Trade Agreement (APTTA), which is designed to facilitate the flow of goods from Afghanistan and for export via Pakistan, as well as through customs into Afghanistan, among other provisions. While the agreement is signed and in place, it has long faced an extensive range of issues in practical application.

CIPE has been working with the Pakistan-Afghanistan Joint Chamber of Commerce and Industry on joint advocacy efforts between business leaders in both countries to try to unblock APTTA implementation. Now that such public, high-level support has been given to the process, it will be up to the private sector to maintain the pressure to realize the APTTA vision of free-flowing trade between these neighbors.

Marc Schleifer is Senior Program Officer for South Asia at CIPE.

India Improves Corporate Governance, But Also Mandates CSR

Corporate Affairs Minister Sachin Pilot (Photo: The New Indian Express)

Corporate Affairs Minister Sachin Pilot (Photo: The New Indian Express)

Last week, after nearly 12 years of debate, India’s parliament finally passed a sweeping new piece of corporate legislation. The 2012 Companies Bill replaces the previous 1956 law and introduces some major reforms to bolster corporate governance in the world’s largest democracy, which has faced questions about its potential for continued growth. According to Indian Corporate Affairs Minister Sachin Pilot, the law “aims at plugging loopholes in the system for a better… business environment,” and will “enhance transparency and ensure fewer regulations, self reporting and disclosure.”

Among other measures, the law defines the concept of “fraud” and empowers a new agency to investigate it; strengthens checks and balances in companies’ governance systems; makes board decisions more transparent; and seeks to increase the accountability of a company’s directors and auditors. The law also establishes that at least a third of directors should be independent, requires companies to rotate auditors, and tightens oversight of companies that take public deposits and of loans among a company and its subsidiaries.

At the same time, some of the reasoning behind other well-intentioned measures in the law is less clear-cut. For instance, certain classes of companies will now be required to have at least one woman board member. The overall goal here is important: to make boards more representative, thus building a more gender-equitable economy. Yet the effectiveness of such quotas has not been universally accepted, particularly because of the risk of creating “token” board slots.

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Watching for Signs of Progress in the Early Days of Pakistan’s New Government


As reported two weeks ago in The Economist, the Karachi Stock Exchange (KSE) has boomed for the past two years, with returns over 40 percent, albeit on rather low volume. The article cites a range of factors for the KSE’s strong performance, including investors’ appetites for risky markets, a new IMF loan for Pakistan, and general optimism after the country’s reasonably peaceful elections in May. Those elections marked the first time that a democratically-elected government served out its full term and handed over power to another civilian government.

On top of that, the new PML(N) government is considered largely pro-business, both by the local private sector and international observers. PML(N) came into office having made a wide range of assurances on needed economic reforms, and as CIPE’s Pakistan Country Director Moin Fudda has written, it was the business community that was instrumental in pushing the political parties to offer concrete policy platforms in the run-up to the May elections.

But digging deeper shows that caution is in order. The $5.3 billion IMF package still requires approval by the Fund’s board in September, and the government must show that it can deliver on a long list of preconditions. Among those are reforms to the crippled energy sector. But in a recent meeting of the Council of Common Interests, which brings together leaders of the four provinces with key federal ministers, agreement on the PML(N) national energy plan was deferred for further discussion.

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CSR 2.0: More than Just Money

Photo: strikeael

Photo: strikeael

A recent New York Times report on Toyota’s work with a member agency of the New York City Food Bank has brought much-needed public and media attention to companies’ efforts to create shared value through corporate social responsibility (CSR) initiatives. Toyota’s engineers are applying efficient manufacturing principles to streamline operations at the Food Bank, getting more meals served more quickly, cutting costs and even reducing wasted transport space. This is a compelling example of what companies can do on the CSR front. Yet in some ways, the article and subsequent coverage is just as interesting as the program itself.

Consider the article’s headline – with emphasis added: “In Lieu of Money, Toyota Donates Efficiency to New York Charity” – which seems to reflect a popular notion (echoed in some online comments) that money is still the primary way in which companies deliver CSR programs.

In fact, for numerous firms, CSR has long meant more than just giving money. As noted in this report in the International Business Times, corporate volunteer programs – in which employees provide their unique and high-level business expertise to nonprofits, microenterprises, microfinance banks, or community groups – are key parts of the CSR profiles of firms like IBM, Dow Corning, Deloitte, and others. Toyota’s in-house efficiency experts support other nonprofits as well. The pro bono work done by law firms can be considered an early form of such CSR.

Such initiatives help employees feel they are part of the firm’s CSR efforts, which surveys show those employees value, thus building employee loyalty, as well as leveraging companies’ core business competencies – which is often worth more to a nonprofit than just cashing a check. Most nonprofits could not afford to purchase such consulting, skills, and advice at market prices. The companies are not just “donating”; by building the capacity of nonprofit clients, in turn helping these organizations carry out their social missions more effectively, the companies are contributing to those missions.

These principles are a key part of what is often called “CSR 2.0,” moving past philanthropy into more sustainable and effective forms of CSR. Such principles have been long accepted by the business world and CSR experts. As this recent coverage of Toyota’s work demonstrates, more work needs to be done in terms of information and awareness, in order to communicate the diversity of CSR programs to a wider audience.

Marc Schleifer is Senior Program Officer for South Asia at CIPE.

Interview with Hammad Siddiqui on Chambers and Associations in Pakistan

CIPE Pakistan Deputy Country Director Hammad Siddiqui was interviewed by the Business Recorder this week, discussing the history and reform of the country’s chambers of commerce and business associations. Siddiqui highlights the role that CIPE has played in strengthening the chamber and association movement since launching its program in 2006, beginning with an effort to re-register all Pakistan’s associations.

As Siddiqui points out, “Back then a lot of these associations did not have offices; they were operating from homes; they lacked staff and had other traits of what is oft termed ‘brief case associations.’ Over 30 percent of these briefcase chambers and associations vanished through the re-registration process.” Siddiqui also illustrates some of the problems that typically face chambers and associations in South Asia generally, including that the original founders have “a hold on the chamber or the association, even when they do not directly hold a position” and that “when they appoint a CEO to run the association’s affairs, they do not really see them as CEOs…. and in spirit, the board does not treat that person as a CEO.”

Siddiqui lays out some recommendations for the further development of chambers in Pakistan, including the need for more competition among chambers and associations, more emphasis on service provision, and a push to empower staff. Read the whole article here.

Marc Schleifer is Program Officer for South Asia at CIPE.

10 Years of Empowering Business Women in Bangladesh

Selima Ahmad with CIPE Senior Program Officer Marc Shleifer and Regional Director Andrew Wilson.

BWCCI founder Selima Ahmad with CIPE Senior Program Officer Marc Schleifer (left) and Regional Director Andrew Wilson (right).

Selima Ahmad, founder of long-time CIPE partner the Bangladesh Women’s Chamber of Commerce and Industry (BWCCI), traveled to Washington DC this week to be honored with the Jeane J. Kirkpatrick Award, established by the International Republican Institute’s Women’s Democracy Network. This award honors those who have made contributions to the advancement of women through politics and civil society around the world.

Ahmad and BWCCI certainly fit that bill, having built an organization in less than ten years from two dozen members to more than 3,000, providing training to over 1,500 women entrepreneurs to improve their business skills, and taken numerous women business owners on trade expositions to allow them to establish trade links with potential partners.

Most importantly, BWCCI has kept the focus on policy advocacy to improve the business environment for its members, to allow them to flourish and to move from microenterprises to the small and medium-sized enterprise (SME) level. In particular, BWCCI has worked on the issue of access to finance for women-owned business, as well as access to marketplaces around Bangladesh.

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