This chapter is an overview of central banking developments between 1919 and 1939, highlighting the establishment and operation of 28 new central banks, most in what are now called emerging markets and developing countries. Inspired by expert advice and underpinned by foreign lending, the new banks were designed to function independently from political interference, and to defend the gold standard as part an international, rules-based network of cooperating institutions. The Great Depression revealed the flaws in this setup. As capital flows dried up and international cooperation faltered, the gold standard disintegrated, and central banks were unable to head off macroeconomic and financial collapse. Designed to fight inflation, they were ill-prepared to address financial fragility. In the wake of their failure, a two-pronged reaction set in. Central bank autonomy was curtailed, while monetary policy was subordinated to new policy objectives, including the support of import substitution in Latin America and central planning in Eastern Europe. At the same time, central banks’ powers expanded, as they were transformed into agents of state-led development policy. Thus, the new central banks of the 1920s and 1930s were integrally involved not just in post-First World War reconstruction and the Great Depression, but also in the key economic developments of the mid-20th century.

Aggregate demand problems can jeopardize the existence of a steady growth path in mature capitalist economies: fiscal policy may be needed to maintain full employment and avoid secular stagnation. This functional finance approach to economic policy endogenizes the movements in public debt. The debt ratio will converge towards a long-run value that depends (i) inversely on the rate of growth, (ii) inversely on government consumption, and (iii) directly on the degree of inequality. The analysis implies that policies and policy debates on the dangers of public debt have been misguided and that the incipient theoretical redirection following the rediscovery of secular stagnation by Summers and others does not go far enough. Unlike in mature economies, functional finance cannot target full employment in developing economies with high rates of underemployment. Instead, high investment rates are desirable, and functional finance should aim to stabilize the level and composition of demand at values that are consistent with a target growth rate of the modern sector; excessive aggregate demand stimulus can squeeze the modern sector and lead to premature deindustrialization.

Several sources of today’s pressure on managers operating in developing and emerging economies (DEEs) are arguably more associated with social issues than profit-making concerns. Managers are thus faced with understanding and embedding solutions to societal challenges in their core business strategies in order to be sustainable. Consequently, solutions that go beyond the traditional focus of the CSR discourse on philanthropy in DEMs have become much more imperative as companies strive to use CSR to re-engineer their value chain. As lack of adequate human skills remains a major problem to firms and society, the existing challenges of human capital in many DEMs present businesses (both small and big firms) with the opportunity to use CSR to increase the knowledge, skills and abilities of both their workforce and the society in general. A firm that is able to invest in human capital development across the entire spectrum of its several stakeholders is more likely to achieve a higher competitive advantage and sustainable growth. In this chapter, we present case studies of two different approaches to using CSR as a tool for human capital development in Africa and given the success of the companies, it is recommended that firms operating in DEMs should place emphasis on developing and utilizing CSR policies and strategies for human capital development.

The informal economy is the source of livelihood for the teeming population of low-income earners in developing economies. Several studies have been conducted on the informal economy’s impact on Africa’s economic development and the neglect of the sector by the government in policy decisions. However, studies on social responsibility in businesses have largely neglected discourse on socially responsible practices in the informal sector, especially in Nigeria. In this regard, this chapter seeks to contribute to the limited extant literature on small business social responsibility in developing economies – specifically Nigeria – and how the exposition of such practices could contribute immensely to the sustainable development of the country. Employing the qualitative research methodology, the study explored how informal businesses conceive of socially responsible practice; what specific social responsibility they adopt; and how these practices could advance the sustainable development of the country. Findings from the study highlighted apprenticeship and credit sales as the major practices informal businesses engage in while also noting that such practices are integrated into the daily operations of informal businesses rather than as a separate department. The authors finally made some linkages between informal social responsibility and sustainable development and advanced some recommendations on the subject matter.