Policy Innovations Digital Magazine (2006-2016): Commentary: Human Rights Must Be a Consideration for Economic Development Organizations

Jun 29, 2006

It is often argued that organizations that deal with economic development should avoid human rights issues because the two topics are distinct. This argument holds true only if people see human rights as strictly legal obligations. A deeper analysis shows that human rights are highly correlated with economic development and are often precursors for it. By examining the important synergies between these two issues, it becomes clear that economic development organizations should consider human rights in their work.

If people understand human rights as essential to attaining socioeconomic goals and aims, then they should work toward the realization of these rights. For example, because economic policies are not neutral in a distributional and human rights sense, it is essential to assess them in those regards too. Rights and responsibilities are another form of capital, and evidence shows that economic growth, capital accumulation and development sustainability depend on the fulfillment of those rights.

In many ways, ensuring human rights is a vital step toward economic development because when people are denied their rights, it often results in social instability, war and other conflicts, which have vast economic consequences.

Economic development organizations (which lend to enhance returns on their assets) must ensure that their investments, policies and institutions avoid becoming unproductive in unstable states—ones in which people are denied their rights. The fulfillment of human rights acts to insure assets’ productivity. Human rights are also important foundations for economic development in terms of economic performance and markets. They are integral in the legal frameworks that make up economic incentives like taxes, subsidies and quotas.

To de-link the whole architecture of economic and financial incentives from the whole framework of rights assumes a purist notion of what constitutes an enabling environment—and is simply artificial.

Similarly, markets are sought to allocate scarce resources, but they function efficiently precisely because rights and responsibilities have been established. Representative democracy—a component of human rights—is a key aspect of the market economy in the form of interest groups, power structures, and other forms of meaningful participation. Without first having human rights in place, most of the economic outcomes of markets will not materialize, and chaos would ensue.

It therefore makes good business sense to create and enhance stable and predictable social processes and, to promote human interactions that are seen and felt to be ethically and morally right. The private sector has a fundamental role to play in the fulfillment of human rights.

The relationship between human rights and economic development can also be seen through a comparison of a positive economic framework, i.e. efficiency and growth, and a normative economic framework in development, i.e. equity and social justice. Positive economics and normative economics are two sides of the same coin. For every positive aspect there is a normative one that puts it in place and legitimizes it within a society.

As economic development institutions move toward normativity in the form of poverty alleviation (e.g. community-based development, gender equality and justice system reform), human rights constitute an important framework through which these economic institutions evaluate the merit of policies. This application of human rights principles to economic development can be clearly seen by looking at poverty alleviation.

Distributional questions in poverty alleviation can only be addressed in a normative framework. Human rights principles lead toward development through providing an orderly way of conducting normative analysis.

Furthermore, violations of human rights are a major determinant of poverty. The argument may hold truth that pursuing poverty alleviation will help realize human rights, but alleviating poverty is only one dimension of a complex process of human, social, and institutional interactions. To take away institutional and legal abilities, or the power to use, control, and allocate human rights endowments is to condemn poor people to poverty.

The implementation of human rights therefore must be embedded within the process of wealth creation instead of being seen as its residual. Economic development institutions are best positioned to make human rights a reality as the creation of material and non-material wealth becomes the best insurance policy for the fulfillment of all rights and their sustainability in the longer term.

From a socioeconomic standpoint, human rights also represent a bundle of initial endowments or another form of capital in economic growth and capital accumulation. Denying human rights has significant consequences in determining optimal levels in resources allocation, comparative advantage, and development effectiveness.

Development is no longer about the creation of separate enclaves of human betterment. Each and every development activity must be part of a unified approach. Disparities in approaches—developing one program under one set of rules and another program under another set—create major asymmetries in development.

Finally, the ethos of economic and social development is determined by the values that are at its core. In this regard, human rights must be considered more than just legal responsibilities or entitlements, although this aspect is critically important. Human rights principles form a normative framework for development and a set of values central to the humanization of development processes and outcomes. These values enrich the wisdom of development and provide universal validity.

Alfredo Sfeir-Younis is the President and Founder of The Zambuling Institute for Human Transformation, and former Senior Adviser to the Managing Directors of the World Bank.

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