Research Summary 27, Idealism, Realism and the Investment Climate in Developing Countries, IDS Working Paper No. 307
The orthodox view about what makes for a good investment climate includes legal protection of property rights and enforcement of contracts as central elements. While desirable in principle, such reforms are difficult to implement and may not lead to significant increases in investment and growth. Moreover some countries (notably China) have made dramatic progress without these institutions in place. The orthodox prescription, based on OECD 'best practice', may well represent a valid long-term goal. But it is ill suited to helping poor countries with weak institutions to increase investment in the short to medium-term.
This is a two-page summary of a paper which can be accessed in full on this page.
Brighton, UK: Institute of Development Studies, 2 pp.