The 2020s will be a crucial decade for development and climate. Beyond the 2030 Agenda for Sustainable Development targets, investment strategies and financing requirements need to anticipate the historic demographic transitions over the coming three decades. Virtually all the population increase between 2020 and 2050 is projected to occur in EMDEs (other than China). EMDEs will account for the vast preponderance of new physical capital in the coming three decades. How these investments are undertaken will determine the success of reaching net-zero emissions by mid-century, achieving climate resilience, restoring natural capital and accelerating human capital development.

EMDEs must respond to this development and climate agenda starting from difficult circumstances. The present trajectory is one of slow growth, low investment and public spending, and rising debt service burdens in many, if not most, EMDEs. The authors argue that there is an alternative path: a carefully programmed and executed big-push investment programme, with associated financing, that could generate higher levels of growth with improved creditworthiness and deliver on both development and climate.

The starting point for a big investment push must be strong country leadership and actions. While the reform agenda will be country specific, foundational components include: institutional capacity to manage investments; a comprehensive and supportive policy package; and ‘just transition’ programmes to alleviate adjustment costs. While this agenda typically will require institutional reforms and, in many cases, sustained capacity building, an intermediate approach is the establishment of country/sector platforms that can bring together all key stakeholders in support of country-led investment and transition strategies.

The paper assesses investment requirements in four priority areas:

  • Human capital (health and education)
  • Sustainable infrastructure and the acceleration of energy transitions
  • Adaptation and resilience
  • The restoration of natural capital through sustainable agriculture, food and land use practices, and biodiversity.

Read the full article about investing in emerging markets at LSE.