Summary
Challenge: Capital flows to emerging and developing markets are frequently
undermined by “Corrosive Capital” — opaque, unaccountable cross-border financing
that exploits governance gaps, weakens the rule of law, and entrenches corruption
— while no shared framework existed to define and promote its positive counterpart.
Outcome: The report establishes a Framework for Constructive Capital, built around
six Cornerstones (Positive Peace, Rule of Law, Accountable Institutions, Political and
Economic Freedom, Social and Economic Inclusion, and a Values-Driven Private
Sector) and an integrated Investment-Integrity-Impact model, providing
governments, businesses, and civil society with a practical and normative basis for
attracting well-governed capital and curbing corrosive flows.
Description
This CIPE and Oxford Analytica Foundation collaboration sets out a market-oriented
approach for strengthening private capital flows and foreign direct investment by
anchoring them in systemic integrity. The report contrasts Corrosive Capital —
financing that is opaque, politically beholden, and prone to elite capture, often
associated with authoritarian state lending — with Constructive Capital, which is
transparent, market-oriented, and accountable at both its source and destination. It
argues that the conditions enabling Constructive Capital must be reinforced
simultaneously through mutually supporting linkages between investment flows, anti-
corruption integrity mechanisms, and impact assessment, situating this work within
the broader context of SDG 16 and the UN Sustainable Development Agenda.
The Framework further surveys supportive trends in responsible business and
investment — including the UN Guiding Principles on Business and Human Rights,
the rise of mandatory human rights and environmental due diligence legislation (such
as the EU’s emerging requirements), and the rapid growth of ESG investing — as
evidence that private-sector norms are converging with the report’s governance
objectives. It closes with a practical action agenda tailored to distinct stakeholder
groups (governments, businesses, business associations, civil society, professional
bodies, and academia), and highlights CIPE’s newly launched Center for
Accountable Investment as the institutional vehicle for translating the Framework into
operational tools and methodologies going forward.