.

Despite growing interdependence, private sector representatives often know everything about their own business and their markets but very little about their larger public sector environment. Acquiring such knowledge is a lifelong learning process that should start in business school. Knowing the public sector, its national and international policies as well as its representatives will help private sector entities to avoid costly political mistakes.

The G20/B20 Summit is the public sector’s acknowledgment that the private sector is indispensable for growth and development. However the opposite has not yet happened. This might be understandable but is unwise as the importance of public sector policy for, and its influence over, the private sector increases with growing interdependence between mature and emerging markets.

The private sector, especially in the West, continues to see the public sector as a necessary evil and as a fundamentally adverse presence best to be avoided. That explains why large, legitimate business entities will go to absurd lengths to avoid paying taxes.

Now, of course, they will point to their efforts to retain as much wealth as possible for managers, staff, and stock holders. That still begs the question though, how paying no or super low taxes in the Bahamas, the Bermudas, or in an obscure Swiss mountain canton helps to provide for physical infrastructure, schools, and countless other state provisions vital for the very existence of a private sector enterprise where its main market is situated.

A big part of the problem lays in the fact that private sector participants, especially those from the West often know virtually nothing about how the public sector works and its representatives think. This is particularly worrying at a time when, both directly and indirectly, the part of the public sector in everyday economic life is growing everywhere.

This growth can be seen directly in the form of greatly increased interaction between the two sectors, especially in international trade and transnational added value chains in production. Most Chinese companies, for example, are still either outright SOEs (State Owned Enterprise) or comprise a sizable number of employees who originally hail from the public sector and see nothing wrong with direct state interference in, and often ultimate political control over private business.

The increasing role of the public sector is seen indirectly in solutions to the presently greatest challenges facing mankind—local conflict containment, climate change, sustainable production of foodstuffs and water, income inequalities between and inside societies, health care and old age care for all—can only be provided by overarching PPPs (Public Private Partnerships) in a large interpretation of this fashionable expression.

Mutual comprehension between the two sectors should already be taught at the relatively small number of influential, internationally active business schools where future private industry leaders are preparing for their tasks. There, they learn everything about their markets and their bottom lines but virtually nothing about the greater strategic and social environment in the different markets where they will be active.

It can be argued that such political preparation is an ad hoc task for each individual once he or she is sent to a particular place and market. If time is of essence or special knowledge is required, such can still be procured, albeit at considerable cost, from the ubiquitous consultant teaching everything from local table manners to the facilitation of access to the locally high and mighty.

Judging from my long experience both as a diplomat—thus a public sector employee helping business representatives understand, and establishing themselves in foreign markets—and now as a Senior Lecturer at one of the globally leading business schools, there is a much more efficient, and considerably less expensive, way for private business representatives to acquire the necessary knowledge and skills.

The respective learning processes should be started in business school with courses offered jointly by instructors with first-hand experience in both sectors, for example, an ‘Entrepreneur in Residence’ together with an ‘Ambassador in Residence’. Private sector representatives will then have to continue the process all through their working life by being present in the public sector, by staying in legitimate contact with civil servants, and frequenting those with special insight such as policy think-tanks and NGOs.

Dr. Daniel Woker is the former Swiss Ambassador to Australia, Singapore, and Kuwait. He currently works as a Senior Lecturer at the University of St. Gallen, as the first ‘Ambassador-in-Residence’ of the University’s Executive School.

This article was originally published in the Diplomatic Courier's November/December 2014 print edition.

The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.

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The Growing Nexus between the Public and Private Sectors

November 15, 2014

Despite growing interdependence, private sector representatives often know everything about their own business and their markets but very little about their larger public sector environment. Acquiring such knowledge is a lifelong learning process that should start in business school. Knowing the public sector, its national and international policies as well as its representatives will help private sector entities to avoid costly political mistakes.

The G20/B20 Summit is the public sector’s acknowledgment that the private sector is indispensable for growth and development. However the opposite has not yet happened. This might be understandable but is unwise as the importance of public sector policy for, and its influence over, the private sector increases with growing interdependence between mature and emerging markets.

The private sector, especially in the West, continues to see the public sector as a necessary evil and as a fundamentally adverse presence best to be avoided. That explains why large, legitimate business entities will go to absurd lengths to avoid paying taxes.

Now, of course, they will point to their efforts to retain as much wealth as possible for managers, staff, and stock holders. That still begs the question though, how paying no or super low taxes in the Bahamas, the Bermudas, or in an obscure Swiss mountain canton helps to provide for physical infrastructure, schools, and countless other state provisions vital for the very existence of a private sector enterprise where its main market is situated.

A big part of the problem lays in the fact that private sector participants, especially those from the West often know virtually nothing about how the public sector works and its representatives think. This is particularly worrying at a time when, both directly and indirectly, the part of the public sector in everyday economic life is growing everywhere.

This growth can be seen directly in the form of greatly increased interaction between the two sectors, especially in international trade and transnational added value chains in production. Most Chinese companies, for example, are still either outright SOEs (State Owned Enterprise) or comprise a sizable number of employees who originally hail from the public sector and see nothing wrong with direct state interference in, and often ultimate political control over private business.

The increasing role of the public sector is seen indirectly in solutions to the presently greatest challenges facing mankind—local conflict containment, climate change, sustainable production of foodstuffs and water, income inequalities between and inside societies, health care and old age care for all—can only be provided by overarching PPPs (Public Private Partnerships) in a large interpretation of this fashionable expression.

Mutual comprehension between the two sectors should already be taught at the relatively small number of influential, internationally active business schools where future private industry leaders are preparing for their tasks. There, they learn everything about their markets and their bottom lines but virtually nothing about the greater strategic and social environment in the different markets where they will be active.

It can be argued that such political preparation is an ad hoc task for each individual once he or she is sent to a particular place and market. If time is of essence or special knowledge is required, such can still be procured, albeit at considerable cost, from the ubiquitous consultant teaching everything from local table manners to the facilitation of access to the locally high and mighty.

Judging from my long experience both as a diplomat—thus a public sector employee helping business representatives understand, and establishing themselves in foreign markets—and now as a Senior Lecturer at one of the globally leading business schools, there is a much more efficient, and considerably less expensive, way for private business representatives to acquire the necessary knowledge and skills.

The respective learning processes should be started in business school with courses offered jointly by instructors with first-hand experience in both sectors, for example, an ‘Entrepreneur in Residence’ together with an ‘Ambassador in Residence’. Private sector representatives will then have to continue the process all through their working life by being present in the public sector, by staying in legitimate contact with civil servants, and frequenting those with special insight such as policy think-tanks and NGOs.

Dr. Daniel Woker is the former Swiss Ambassador to Australia, Singapore, and Kuwait. He currently works as a Senior Lecturer at the University of St. Gallen, as the first ‘Ambassador-in-Residence’ of the University’s Executive School.

This article was originally published in the Diplomatic Courier's November/December 2014 print edition.

The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.