Corrosive & Constructive Capital Initiative
Led by the Center for International Private Enterprise
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Our Mission
To close governance gaps that Corrosive Capital can and often does exploit, so that recipient countries can be more ready to embrace Constructive Capital opportunities and absorb funding with less risk to democracy, institutions, and sovereignty.
Corrosive Capital
Constructive Capital
Definition:
Corrosive Capital is financing, whether state or private, that lacks transparency, accountability, and market orientation.Definition:
Constructive Capital refers to financial flows that are well-governed at the funding source and destination and respond to market voids.Problem:
Originating from authoritarian regimes, Corrosive Capital exploits and exaggerates governance gaps to influence economic, political, and social developments in recipient countries.Indicators:
Transparent terms and entry into the market, accountable to a wide array of local stakeholders in the recipient country, and justification is based on market principlesSolution:
Increase transparency and accountability around investment to neutralize the effects of Corrosive Capital.Benefits:
Benefits of Constructive Capital investments include transparent and documented terms, stakeholder accountability, and more.Corrosive Capital
Definition:
Corrosive Capital is financing, whether state or private, that lacks transparency, accountability, and market orientation.Problem:
Originating from authoritarian regimes, Corrosive Capital exploits and exaggerates governance gaps to influence economic, political, and social developments in recipient countries.Solution:
Increase transparency and accountability around investment to neutralize the effects of Corrosive Capital.Constructive Capital
Definition:
Constructive Capital refers to financial flows that are well-governed at the funding source and destination and respond to market voids.Indicators:
Transparent terms and entry into the market, accountable to a wide array of local stakeholders in the recipient country, and justification is based on market principlesBenefits:
Benefits of Constructive Capital investments include transparent and documented terms, stakeholder accountability, and more.Featured Resources
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Investing in Latin American Democracy: Impacts of Corrosive and Constructive Capital
Investing in Latin American Democracy: Impact of Corrosive and Constructive Capital summarizes the key findings from five years of investigation into the influx and effects of "corrosive” and “constructive” capital in Latin America. The weakened and fragile state of many Latin American nations has increased their dependency on foreign financing, which often comes from anti-democratic nations.
What Will It Take To Rebuild Ukraine?
Ukraine’s reconstruction and recovery costs are the focus of a new report released jointly with the government by the World Bank, the United Nations, and The European Union. The assessment focuses on humanitarian and economic needs, as well as what it will take to rebuild once Russia’s war on Ukraine is over. Updated estimates now exceed $400 billion and there is much debate over how to support reconstruction in Ukraine that is truly transformative and ensures a clear break from the past.
Center for Accountable Investment (CAI) Outline
The Center for Accountable Investment (CAI) uses the concepts of Corrosive Capital and Constructive Capital to examine the many ways investments can undermine or support market and democratic institutions in recipient countries, as well as identify actions to strengthen economic resilience.