Accelerating Capital Markets Development in Emerging Economies

The document argues that while economic growth was previously the primary driver of international investment in emerging markets, the quality of policy frameworks and institutional environments will increasingly be the key differentiators. It provides a 'Market Attractiveness Matrix' to help policy-makers identify gaps in investment opportunity, ease/cost, and risk. The paper emphasizes that international investment should not be a stand-alone strategy but should be integrated with the development of local investor bases to ensure market sustainability across four pillars: depth, efficiency, transparency, and stability.

• International investors evaluate emerging markets by balancing investment opportunity, investment ease/cost, and investment risk across 12 specific components, including market size, liquidity, macroeconomic stability, and corporate governance.
• The drivers of international investment are shifting; whereas liberalization and free flow of capital were dominant in previous decades, investors are now more concerned with political and global economic stability, and policy frameworks will increasingly differentiate markets more than GDP growth alone.
• Beyond technical policy frameworks, 'soft factors'—including investor perceptions of openness, transparency, and risk—materially impact investment decisions and can be managed through consistent communication and predictability.
• A sustainable local capital market is defined by four pillars: Depth (participation of issuers and investors), Efficiency (liquidity and transaction execution), Transparency (information and oversight), and Stability (predictability of the market and institutions).
• International investment can actively promote market sustainability by increasing the supply of capital (Depth), complementing domestic trading behavior to increase liquidity (Efficiency), demanding higher reporting standards (Transparency), and providing capital that is not tied to domestic economic slowdowns (Stability).
• Policy-makers face 'headwinds' to reform, such as shifting political priorities and misalignment between stakeholders, but are supported by 'tailwinds' including rising demand for infrastructure financing and the growth of domestic investor bases.
• Regional integration, such as the Mercado Integrado Latinoamericano (MILA) involving Chile, Colombia, Peru, and Mexico, is a viable strategy for smaller economies to build the scale and visibility necessary to attract international investors.

APA

World Economic Forum (2017). Accelerating Capital Markets Development in Emerging Economies. http://www3.weforum.org/docs/WEF_How_Global_Can_Power_Local_WP_report_2017.pdf

Chicago

World Economic Forum. Accelerating Capital Markets Development in Emerging Economies. 2017. http://www3.weforum.org/docs/WEF_How_Global_Can_Power_Local_WP_report_2017.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Accelerating Capital Markets Development in Emerging Economies |date=May 2017 |url=http://www3.weforum.org/docs/WEF_How_Global_Can_Power_Local_WP_report_2017.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2017accelerating, author = {{World Economic Forum}}, title = {{Accelerating Capital Markets Development in Emerging Economies}}, institution = {World Economic Forum}, year = {2017}, month = may, url = {http://www3.weforum.org/docs/WEF_How_Global_Can_Power_Local_WP_report_2017.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }