1979- Launching a stock market in a developing country is a problematic venture. Policy planners have to deal with a long list of thorny issues, including political instability, cultural barriers, lack of initial capital, lack of investment opportunity, lack of infrastructure, corruption, and unbalanced group dynamics. This section will attempt to analyze these problems, and tentatively suggest some solutions that can be applied in the Cambodian context. A. Political Instability 1. No investor wants to pour money into a country where a new government can shoot its way to power, kill the old government, and steal its money.
Political stability affects the investment environment very clearly and causally.
Stability is a crucial part of the development of an economy. The world's great economies enjoyed prolonged periods of political stability, and those nations in the 20th century that have risen from the ranks of the underdeveloped, such as Japan, South Korea, Taiwan, Singapore, and Hong Kong, have all enjoyed stability. The fact that these are all Pacific Rim nations may or may not be coincidence, but if any cultural explanations for economic growth are valid, they might be more valid as a cultural explanation for political stability, which helps lead to economic development. Stability is hardly a sufficient condition to launch a market, but it is a necessity. The three emerging securities markets discussed previously provide strong examples.