Partners in Development

Evaluation of policy instruments aimed at engaging Dutch businesses in sustainable development (2013-2020)

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Results — Evaluation of the ‘partners in development’ policy

This evaluation discusses the results of activities funded by the Foreign Trade and Development Cooperation budget which are designed to engage Dutch businesses in the sustainable development of low- and middle-income countries. The evaluation covers the period from 2013 and 2020 and was performed by the Policy and Operations Evaluation Department (IOB) of the Dutch Ministry of Foreign Affairs.

Background

Successive Dutch governments have pursued a policy of encouraging Dutch companies to contribute to the sustainable development of low- and middle-income countries. This has involved activities not only in developing countries, but also in emerging economies such as China, India, Brazil and South Africa. We refer to this as the ‘partners in development’ (PID) policy.

Businesses are expected to operate in accordance with the precepts of international responsible business conduct (IRBC) and to contribute towards the achievement of the UN’s Sustainable Development Goals (SDGs) in 2030. The government also believes that there are opportunities for strengthening the earning capacity of the Dutch economy by forging closer trading relations with the countries in question. The aim of encouraging private-sector engagement in sustainable development is a recurring theme throughout the wider government policy on aid for, trade with and investment in developing countries, and in the broad range of programmes and initiatives that have been undertaken as part of this policy since 2013.

Key question

What activities may be classified as forming part of the PID policy and to what extent have these helped to foster the sustainable development of low- and middle-income countries and to strengthen the earning capacity of Dutch businesses?

Conclusions

The study reached the following conclusions (among others):

  • Over 50 policy instruments contribute to some extent to the objective of engaging private-sector companies in the sustainable development of low- and middle-income countries. However, this objective has not been widely translated into policy. There is no coherent vision, nor a predefined theory of change.
  • Only a small number of policy instruments help both to foster the sustainable development of low- and middle-income countries and to strengthen the earning capacity of Dutch businesses. Many of the tools in question are assessed as probably having a positive impact on one of the two objectives (without there necessarily being any evidence for this), but seldom on both of them.
  • Policy instruments are designed only to a limited extent both to foster sustainable development and to strengthen the earning capacity of Dutch businesses. This explains why some evaluations of policy instruments do not pay much attention to the impact on sustainable development, while others do not pay much attention to the impact on the earning capacity of Dutch businesses.
  • Although most of the policy instruments under review seek to a large extent to engage Dutch businesses in sustainable development, it is often unclear how many Dutch businesses are engaged. In general, initiatives aimed at value chains or industrial sectors have the greatest potential reach, while partnerships have only a limited reach.
  • While some instruments were viewed as likely to encourage Dutch businesses to change their behaviour, this effect was assessed as ‘variable’ or ‘unclear’ in a number of other cases. The policy’s theory of change as reconstructed by us identifies three types of behavioural change: the integration of RBC and improved value chain sustainability; the strengthening of trade and investments (in and with low- and middle-income countries); and the formation of partnerships aimed at devising solutions.
  • Activities are reasonably consistent with the specific questions and needs expressed by businesses. Those policy instruments that are designed primarily to foster trade are less geared towards relevance for LMICs. Evaluations of trade policy instruments pay little or no attention to developmental relevance.

Recommendations

The evaluation generated a number of recommendations, including the following:

  • Consider a range of strategies for engaging businesses in sustainable development. Make clear how these strategies are to be used, what objectives they are designed to achieve, what assumptions underlie them, and how they are related to each other. Formulate a theory of change that explains how all this works.
  • Formulate objectives for reaching businesses. Make clear whether and to what extent a policy instrument is intended both to engage Dutch businesses in sustainable development and at the same time to strengthen their earning capacity.
  • Design policy instruments that are geared more towards achieving the desired change in corporate behaviour. Do not focus exclusively on requirements in relation to IRBC, but encourage and facilitate contributions to sustainable development, taking the SDGs as a guide.
  • Make sure that interventions not only affect the behaviour of those directly involved, but also have an indirect impact on that of other parties. Give greater priority to the lever effect, and assess the potential of activities for scaling-up and replication.
  • Improve cooperation and coordination, with a view to internal and external coherence. Work together with other parties to create an environment that encourages businesses around the world to contribute to sustainable development.