One of the biggest challenges that often confront developing countries, and multinational corporations like GE that may operate within them, is building strong indigenous legal institutions — institutions that will foster the rule of law, protect the rights of individuals, and create a predictable and transparent legal and regulatory environment that stimulates investment, trade and economic growth.
There are many business-related reasons for multinationals to promote rule of law in emerging markets. Rule of law fosters a level playing field on which to compete. It promotes stable, durable economic growth in prime export markets. The predictability it brings helps business managers anticipate commercial needs and constraints. Rule of law also helps to create an environment where multinational companies morally and ethically feel comfortable doing business.
As a company strongly committed to the highest ethical and compliance standards, rule of law is deeply embedded in GE’s fabric, and never far from the surface of what we do. I think it’s quite natural that we are working with countries to strengthen rule of law globally. We do so with our eyes wide open, knowing that these are tough, sometimes politically sensitive, issues, but ones that countries need, and usually want, to address.
Our approach is to identify opportunities on the ground through our daily engagement with government officials, international institutions and other stakeholders. We often work with partners who share similar interests (government, industry, civil society and non-governmental organizations) to design a program with practical impact that is tailored to the local environment. We will figure out what resources are needed to obtain results and help contribute them.
Our strong reputation in compliance is seen as a strategic advantage in our rule of law promotion, as is our global scope. These are backed by the financial support of GE Foundation, which funds numerous rule of law initiatives around the world. GE lawyers in the region will often contribute their own time and effort as well.
Many of the emerging markets in which we operate have made important strides in strengthening rule of law. In Asia, countries that have started opening their markets and strengthening their legal institutions, have stimulated economic growth, raised standards of living and created the conditions for the ingenuity and hard work of their people to blossom. That has not gone unnoticed by their neighbors, creating, to some extent, a cascading chain of liberalization and openness across the continent.
Have they gone as far as we would like? No. We recognize that it’s a challenge to transition from a government with unlimited discretion and power to one constrained by rules and regulations. However, strong rule of law ultimately strengthens a country economically, politically and socially, and creates an environment that enables companies like GE to engage more fully in the country’s development.
Karan Bhatia is Vice President and Senior Counsel of GE Global Government Affairs and Policy