Two-Pocket Formula | CADE 2023 | elena conterno | Peruvian Economy | IPAE | economy

By: Elena Conterno, Public Policy Expert

I firmly believe that democracy with a market economy and a functioning state is necessary for people to progress and their freedoms to be guaranteed.

This is equivalent to thinking of someone standing on the ground holding two pockets:

-Democracy is the platform that sustains it and guarantees its freedoms;

The right pocket is filled with your worker’s salary or the entrepreneur’s sales, depending on the economy;

The left pocket is filled with services received from the state, especially health and education, and should be of quality.

Therefore, companies have a special relevance in bringing proper pocket income to families every month. It has had a significant impact on halving poverty in the last 25 years. According to various publications, 75% of this reduction is explained by economic activity that brought income in salaries and sales to households. Corporations also contribute through taxes that fund the operation of the state, but the quadrupling of the public budget over the past 25 years still has a way to go to translate into quality services.

In addition, through organizations, organizations promote better public policies to ensure that democracy is better and that health and education services are better accessible to Peruvians.

We have IPAE whose mission is to promote business activity to create solid institutions, sustainable and inclusive economic growth, quality education and equal opportunities for the well-being of all Peruvians. There is Sustainable Peru, which promotes sustainable development in the country, promoting business activities in each of the 17 Sustainable Development Goals. There is Es Hoy, a movement of business leaders who mobilize and demonstrate business resources and skills to promote high-impact initiatives that respond to the country’s challenges and contribute to raising the standard of responsible governance in the private sector.

In this sense there are initiatives by business groups, such as the Bicentenario Institute, the Banco de Crédito and the Creditorp group initiative, which seek to contribute to an active, responsible and vigilant citizenry and effective decentralized institutions. Directs resources to civil society initiatives, programs and projects.

In addition to all of the above, there are corporate shared value and social responsibility initiatives. I focus on the former because they allow the creation of value for society and economic value.

Shared value initiatives suggest that entrepreneurs think like entrepreneurs and think like philanthropists to solve society’s problems. That is, putting all the creativity, initiative and passion of an entrepreneur into solving social and environmental problems, and being profitable while doing so. In this regard, starting in 2021, IPAE, with the support of the Frieda and Manuel Delgado Parker Association and USAID, FSG and RPP, presents every year a list of #CompaniesThatTransform Peru, which recognizes the many business initiatives that fall within this approach. Let’s hope there will be more.

Therefore, companies contribute to society by creating jobs, paying taxes, and making our democracy and government work better by promoting better public policies, and solving social and environmental problems through shared value. Of course, there are still outstanding challenges in business performance that the aforementioned initiatives seek to address. And there are still bigger challenges as a society in ensuring that our political and public systems are of quality.

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