NCPA - National Center for Policy Analysis

HOW TO DISMANTLE A SOUND BUSINESS PLAN

May 17, 2005

Rock-star/philanthropist Bono and his wife are starting a new clothing line with the altruistic intention of creating positive impacts in the developing world, says Joshua P. Hill (George Mason University). The couple's clothing line, Edun (nude in reverse), will tout organic materials made in family-run factories in South American and Africa with fair-labor practices.

Hill says Edun's employment opportunities may change lives overseas because foreign direct investment is one of the best types of development assistance. Furthermore, replacing handouts with earnings makes a powerful contribution to developing institutions, such as economic and civil rights.

Indeed, manufacturing goods in developing countries creates:

  • Greater levels of employment in communities, along with increasingly higher wages.
  • A higher demand for labor, giving workers more bargaining power to increase wages or environmental standards.

Most of what Bono seeks to do is already being done on a much larger scale by multinational corporations, says Hill. But Bono has informed the press that he will determine the production site, to ensure the money is spent where it will do the most good.

While it may seem Bono is doing nothing more than what other businessmen do, like making decisions about where to locate production, there is an important distinction, says Hill. The criteria for Bono?s decision-making are apparently different from what the market would otherwise dictate.

In order to have the largest possible impact with this venture, Hill says Bono should locate production wherever labor is cheapest -- and then pay above the market wage.

Source: Joshua P. Hill, ?Bono?s Developing Business,? A World Connected, May 7, 2005.

 

Browse more articles on Economic Issues