Financial Capital in Ethiopia, Indonesia, and Trinidad and Tobago

The document examines financial capital—defined as the difference between foreign financial assets and liabilities—across three countries. It finds that while Ethiopia and Trinidad and Tobago generally had positive financial capital, both saw a trend toward accumulating more liabilities in later years. Indonesia remained a net debtor throughout the study period. The brief argues that financial capital should complement GDP as a measure of well-being and suggests that well-managed liabilities, such as foreign direct investment, can boost other forms of capital like human and produced capital. It recommends diversifying financing sources, improving governance to optimize returns on capital, and reforming the international financial architecture to reduce public debt burdens in developing nations.

• Financial capital generally contributed positively to total wealth in Ethiopia and Trinidad and Tobago, although both countries began accumulating more liabilities than assets toward the end of the study period.
• Trinidad and Tobago transitioned from a debtor nation to a lender in 2008, largely due to the establishment of the Heritage and Stabilisation Fund in March 2007. Its financial capital peaked in 2014 at 34,600 TTD (8,300 USD) per capita.
• Ethiopia's financial capital remained positive until 2019/20, when it became a net debtor with a value of -122 ETB (-14 USD) per capita. This decline since 2010/11 is attributed to the accumulation of foreign debt and foreign direct investment (FDI) flows, with total foreign debt estimated at 30.36 billion USD in 2020.
• Indonesia was the only country in the study where financial capital remained negative from 2001 to 2020. A sharp decline since 2008 may have been influenced by Law No. 25 of 2007, which provided incentives for foreign investors.
• Public debt levels in 2023 represented 38% of GDP in Ethiopia, 39% in Indonesia, and 53% in Trinidad and Tobago. The document argues that the international community must address the high cost of debt and expand affordable long-term and contingency financing.
• The document highlights the need to diversify financing sources, specifically in Trinidad and Tobago, where the Heritage and Stabilisation Fund relies heavily on the petroleum sector.

APA

Zoundi, Z., Smith, R., & Bizikova, L. (2024). Financial Capital in Ethiopia, Indonesia, and Trinidad and Tobago. International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-05/financial-capital-trends-policy-implications.pdf

Chicago

Zoundi, Zakaria, Robert Smith, and Livia Bizikova. Financial Capital in Ethiopia, Indonesia, and Trinidad and Tobago. International Institute for Sustainable Development, 2024. https://www.iisd.org/system/files/2024-05/financial-capital-trends-policy-implications.pdf.

Wikipedia

{{cite report |last1=Zoundi |first1=Zakaria |last2=Smith |first2=Robert |last3=Bizikova |first3=Livia |title=Financial Capital in Ethiopia, Indonesia, and Trinidad and Tobago |publisher=International Institute for Sustainable Development |date=April 2024 |url=https://www.iisd.org/system/files/2024-05/financial-capital-trends-policy-implications.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{zoundi2024financial, author = {Zoundi, Zakaria and Smith, Robert and Bizikova, Livia}, title = {{Financial Capital in Ethiopia, Indonesia, and Trinidad and Tobago}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = apr, url = {https://www.iisd.org/system/files/2024-05/financial-capital-trends-policy-implications.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }