Private investment as a percent of GDP in the newly industrialized economies of Asia has been double the rate in sub-Saharan Africa. Creating such an environment is critical to the future of African nations, because as you look at economic success in countries around the world in recent decades, I think the evidence is overwhelming that it is private sector investment and activity that is key to fostering economic growth and raising living standards. Developing countries focused on attracting capital have a complex set of challenges before them. Let me describe six of the elements that I view as particularly critical in the context of African nations today in attracting private capital. First is political and social stability.
Instability is obviously a major deterrent to investors.
Moreover, in Africa, the problems affect not only the countries involved but the perception of the whole continent. Third is a sound legal and administrative framework. Let me also add, as someone who has been around financial markets a long time, corruption is a major impediment to economic activity, a deterrent to foreign investment, and leads to the misappropriation of scarce resources. Fourth is openness to international trade and investment. However, regionalism must be part of a larger strategy of global integration, and not an instrument for trade and investment barriers of the region towards the global economy.