🤔 At first glance, these two might seem relatively unrelated, but they can actually be linked in various ways! 💡

💰 Development cooperation can provide investment opportunities for companies in partner countries, leading to increased economic growth & potentially benefiting the stock market 📈

🌎 Improving a partner country’s economy can create a more stable & attractive environment for foreign investors, potentially leading to increased investment & growth in the stock market 💰

💡 International development cooperation can also lead to the creation of new markets & consumer demand, benefiting companies operating in those markets & potentially leading to increased stock prices 📈

❗️ However, organized development cooperation typically doesn’t consider working more directly with stock market stakeholders in their approaches. 🤔

What can development agencies do? 💡

1️⃣  Conduct market analyses

Development agencies can assess the potential impact of their projects on the stock market. This could involve studying the local market conditions, identifying and supporting potential investment opportunities, and assessing the risk-reward trade-off.

2️⃣  Engage with the private sector

The agencies can engage more with the private sector to better understand their needs and investment priorities, i.e. not leaving this to separate projects. This could help to identify opportunities for private sector investment and promote more sustainable economic growth.

3️⃣  Encourage responsible investment

Development agencies could encourage responsible investment practices among private sector actors and promote the adoption of socially responsible investment (SRI) principles.

4️⃣  Promote financial literacy & education

Development agencies could promote financial literacy and education among local communities, including the importance of responsible investment practices.

5️⃣  Foster a stable & predictable investment climate

Development agencies could work with governments and other stakeholders to create a stable and predictable investment climate, which can attract foreign investment and benefit the stock market.

6️⃣  Learn from venture capitalists

Development agencies could learn from the experiences of venture capitalists and how they engage with startups they invest in. This could provide valuable insights into effective strategies for promoting entrepreneurship, attracting investment, and promoting sustainable economic growth.

A note on “skin in the game”

This is a term that refers to the concept that investors are personally invested in the outcome of their investments, meaning that they have a stake in the success of the businesses they invest in. This clearly influences their engagement in many ways. It can drive them to take a more active and hands-on approach.

Warren Buffett for example is known for his investment philosophy of “skin in the game”. He believes that it is a key factor in driving investor behavior and promoting responsible and successful investing. Therefore he applies this concept to the people who work for him, requiring that his managers and executives also make a significant personal investment in the companies they decide on investing with Buffets funds. By having a personal stake in the success or fate of these companies, Buffets executives are more likely to act in the best interest of these companies and make decisions that promote long-term growth and success.

Ministries could learn from this approach by encouraging a similar “skin in the game” mentality among the implementing agencies of their “investment” programs. By requiring implementors to have a personal stake in the outcome of the projects, development agencies could promote a more responsible and engaged approach to their work, potentially leading to better results and more sustainable economic growth.

Obviously, there is no breakthrough idea on how to facilitate this idea right now. The machine is greased well and executives in the implementing agencies get decent salaries that are not dependent on the success of the projects they work on. But it is definitely worth to push on driving this idea forward. A first step could be to consider development funding to constitute more of an investment with a somewhat calculable ROI — as IFPRI has commenced with their 2014 Nutrition Report — and the accompanying communications in the frame of professional investor relations.

💔 While these steps may not guarantee a direct & positive impact on the stock market, they could help create conditions for sustainable & inclusive economic growth, potentially benefiting the stock market and development in the long run 💪

NB: The article was created with support of chatgpt and the visual with DALL-E