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Report

The Case for Capital Alignment to Drive Development Outcomes

Astri Kimball and John E. Morton



Editor’s Note: This brief is part of the 2013 Brookings Blum Roundtable Policy Briefs, which details the role of the private sector in the post-2015 development agenda. Read the full policy brief here.

EXECUTIVE SUMMARY

The emerging markets have largely emerged. According
to the International Monetary Fund, the combined
GDP of the emerging markets will overtake that
of developed economies within the next two years.
Foreign direct investment in emerging economies
now outpaces investment in developed countries and,
between now and 2030, some 2 billion people, largely
in emerging markets, will join the global middle class.
Today, private capital investment is the major driver
of growth and improvements in quality of life around
the world. In the past few years, private investors have
begun to express a new and growing interest in investments
in sustainable economic development that
contribute to addressing global
development challenges. But
to date, hundreds of billions of
dollars in potential private investment
remains on the sidelines
because it also requires
other, complementary capital to
accompany it. At the same time,
both philanthropic capital and
the new breed of double-bottom-
line impact investors are
increasingly focused on how
to connect with and leverage
more commercially focused private
capital. Thus there is now a
unique opportunity to align the
tools, resources and energies of
philanthropic and private capital
in pursuit of targeted development
challenges in such a
way that crowds in private investment capital—both
from impact investors and more commercial investors.
Development finance institutions are uniquely
positioned to be the connector that helps align these
groups. The products already exist to deliver on this
potential. What is now needed is a process innovation.

Authors

A

Astri Kimball

Senior Advisor, Overseas Private Investment Corporation