Capital with a compass: How to unlock investments in the hardest places
The article analyzes the shift in global development since 2025, focusing on mobilizing private capital in fragile states. It notes a 23% contraction in aid from advanced economies and the World Bank's new emphasis on job creation. In fragile states, only 11% of private development finance was directed in 2023-2024, hindered by zero-sum politics, weak governance, and broken social contracts. The author argues that multilateral development banks (MDBs) should pursue a dual strategy: strengthening governance and institutions, and leveraging their underused strategic intelligence to navigate social and political forces. Examples from Tunisia and sub-Saharan Africa show how ignoring governance can entrench predatory power. The piece concludes that strong fiscal institutions attract higher-quality foreign investment, while weak governance undermines both development and private capital returns.
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