Research & Insights

Financing for Development (FfD4) Identifying Systemic and Systematic Risks of Not Allocating Adequately Priced Capital to Emerging Markets and Developing Economies

The Financing for Development Addis Ababa Action Agenda calls for increased private finance, debt sustainability, and an enhanced focus on addressing systemic issues and financial stability to support economic growth in Emerging Markets and Developing Economies (EMDEs). However, barriers to adequately priced capital for EMDEs remain high.  This session explored the proposition that, in order to incentivize sustainable investment in EMDEs at scale, investors need to understand the systemic and/or systematic risks of not allocating such capital. Significant research has been conducted on the overlooked opportunity of investing in these markets. However, according to dominant market interpretations of risk, investors typically believe they can achieve comparable or stronger returns in developed markets with less risk than EMDEs.