- Acknowledging the unprecedented events of 2020, Armand Arton explained that mobility is at an all-time low, which is impacting both big and small countries, as well as developing nations. As highlighted by Arton, promoting multilateralism is key to building back from the pandemic. When looking at small islands and developing nations, in particular, increased social impact investment plays an integral role in promoting economic resilience. When nations participate in social impact investment programs, they open the door to opportunities that can significantly improve the economic welfare and prosperity of their citizens.
“We’re living in a very difficult year, where mobility is at an all-time low for our generation, and this has impacted many states around the world,” Armand Arton
- While investment is critical to all countries, it is particularly impactful for developing countries and emerging markets as they are less equipped to deal with environmental ills, social and political unrest, and volatile financial markets. To further this point, Prime Minister Timothy Harris spoke on the importance of citizenship by investment (CBI) for small island economies such as St. Kitts and Nevis. Harris emphasized the fact that foreign direct investment (FDI) brings developing economies the capital and skills to attain long-term growth. In this way, Harris noted that impact investment programs consistently surpass purely financial gain by facilitating sustainable, educational, and cultural growth.
- In recent months, COVID-19 has identified the need to support social impact investments. FDI, CBI, and other social impact investment programs have proven critical to countries around the world as they respond to an unprecedented global pandemic. Harris made it clear that had it not been for the CBI programs recently introduced in St. Kitts and Nevis, he would not have been able to respond successfully to COVID-19. Due to political and economic pressures, emerging markets are more likely to experience preemptive reopening and thus demonstrate the importance of impact investment programs on the stability of emerging markets.
- Emerging markets are at increased risk of financial, social, and political instability given increased levels of inequality, exacerbated by COVID-19 and climate change. Nouriel Roubini advocated for emerging markets and frontier economies to utilize a combination of social impact investment, FDI, and CBI programs to combat the negative effects of the pandemic and promote economic prosperity following natural disasters. In particular, Roubini emphasized that the funds raised by these initiatives are able to retire high-interest debt from the International Monetary Fund, the World Bank, and private investors, while also allowing smaller economies to build a framework that enables long-term economic growth, prosperity, and sustainability. These investment strategies also go beyond the initial investment of foreign capital by encouraging “follow-on investment” and increased consumption, which in turn encourages more diverse entrepreneurship that benefits the economy. Roubini cited Cyprus, Portugal, and Hungary as nations that have benefited from this strategy.
- As COVID-19 has sent shock waves through the global economy, Amina Mohamed highlighted the need for diversified investment vehicles. She stressed that a one-size-fits-all approach to FDI fails to account for important nuances fundamental to the success of these partnerships. Specifically, she pointed to the pandemic’s damage to the tourism sector, which disproportionately disadvantages emerging and developing economies that heavily rely on these industries for financial stability. For this reason, Mohamed echoed earlier sentiments that the effectiveness of investment models should be measured by their business impact on communities in addition to revenue. With the global pandemic causing fundamental shifts in consumer behavior, Mohamed noted that social impact investing is essential to spurring innovation in order to meet new demand.
“We need to create partnerships that can respond to the volatility, unpredictability, uncertainty, and ambiguity that has caused economic constriction as a result of the pandemic,” Amina Mohamed
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