Investment Facilitation in Transitional and Fragile States

December 16, 2013

This Report was updated in 2019. Please read Investment Facilitation Revisited for the latest CSIS analysis on this topic.

This report from the CSIS Project on Prosperity and Development outlines a new tool for policymakers to encourage private-sector development in developing nations. Specifically, it argues that in fragile states there is an intermediation gap between sources of capital and entrepreneurs seeking investment. This gap prevents investment by raising transaction costs and exacerbating information asymmetry. Cusack and Tilleard present a case study of this gap as observed in their work in South Sudan. Then they propose a model of investment facilitation that bridges the intermediation gap. The model is based on donor funding of a neutral nongovernment facilitator to identify attractive investment opportunities, link them to capital, and facilitate transactions.

Jake Cusack and Matt Tilleard are managing partners of CrossBoundary, an investment and economic development advisory firm focused on frontier markets and operating in the Middle East, East Africa, and Central Asia.