• The private sector must play a key role in inclusive economic growth.
  • We must unite the individual efforts of different countries to create a global network of public-private partnerships.
  • Here's how public and private leaders can coordinate on goals, funding and policies.

The COVID-19 pandemic made an already complex world all the more challenging. It had a severe impact on the global economy, and though international institutions like the IMF were quick to offer financial support, a full recovery will take time.

In a sense, the pandemic divided the nations of the world into two zones: those who are still vulnerable to the virus and those who have largely overcome it. The worst appears to be over in advanced industrialized nations, and they are largely confident that they can manage new variants. But in many developing countries, vaccination rates remain low. This division threatens to exacerbate the large wealth gap between rich and poor countries.

For all these reasons, the need for inclusive economic growth has never been more clear, and in this effort, the private sector is especially well equipped to play a big role. Early on during the pandemic, the United States and Europe used industrial policy to accelerate the research, development, and production of COVID-19 vaccines at unprecedented speed. Now, to spur more inclusive growth in advanced and developing countries alike, the revolutionary success of those public-private partnerships must be replicated all around the world.

How to unite and scale cooperative efforts

The first order of business would be to unite the individual efforts of different countries. Today there are many public-private partnerships working in isolation, so advanced countries should create institutional mechanisms to link them together into a global network and direct them toward shared goals.

Beyond linking together those efforts already underway, public-private partnerships can help find new and innovative ways to leverage multi stakeholder relationships and scale impact. There is an opportunity for the public sector to provide the foundational capital or financial conditions necessary to support private sector innovation. Such innovations are important to ending the COVID-19 pandemic, not only by providing sufficient vaccines to poor countries, but in overcoming the logistical hurdles of a large scale vaccination campaign.

Some achievements of public-private partnerships should serve as models for future action. We’ve seen the power of such partnerships to promote more inclusive growth, particularly for women.

For example, in 2014, Goldman Sachs partnered with the World Bank Group’s International Finance Corporation to help address one of the biggest obstacles faced by women entrepreneurs around the world: lack of access to capital. Working together, they created the Women Entrepreneurs Opportunity Facility, which mobilized $1.45 billion of capital for local financial institutions to lend to women owned businesses.

We’ve also seen public-private partnerships help advance the transition to a low carbon economy. For instance, Goldman Sachs, Bloomberg, and the Asian Development Bank recently created a new Climate Innovation Fund to deploy capital to energy transition projects across developing markets. They aim to spur greater investment in mass transit, green buildings, sustainable agriculture and other sectors with large carbon footprints.

Again and again, private-public-partnerships have created change where policy alone would have fallen short. With so many climate transition and inclusive growth challenges facing us today, such innovation is not a “nice to have,” it’s a “must have.”

There is also a need for new international frameworks to organize worldwide public-private partnerships. They could help coordinate policies across countries, but also provide the private sector the clarity it needs to pursue global agendas. Having a global framework will also make it easier to pursue projects and initiatives in multiple countries, and perhaps face less resistance from developing countries. International institutions and frameworks have a greater chance of securing China’s support than those centered in the U.S. and Europe.

At the same time, it is imperative that governments better coordinate on policy and shared inclusive growth objectives. This will not only provide a clear roadmap for public-private partnerships at the global level but will facilitate the regulatory coordination that is necessary for large public-private partnerships to succeed. The burgeoning “green” policy and regulatory frameworks could serve as useful templates for the future.

Creating quantifiable targets to track progress toward shared goals would also go a long way toward ensuring accountability. Goldman Sachs has found that its 10-year commitment of $750 billion in sustainable finance activity has been more than helpful in unifying efforts across the organization to make an impact. Setting concrete, measurable goals can do the same for public-private partnerships.

Finally, a successful global effort requires adequate funding. The G-7 or G-20 could serve as appropriate forums for identifying funding goals and creating funding pools and mechanisms for their dispersal. This effort must be closely tied to policy goals, but also regulatory frameworks across different sectors in various countries.

This essay is part of a joint collaboration with the World Economic Forum's Global Action Group. Read Borge Brende on the stepping stones to global cooperation here. Read Mari Elka Pangestu and Samir Saran on building an equitable economy here.