Re-building countries previously colonised

These countries never regained their pre-colonisation prosperity. It only went downward, from bad to worse, in most cases, with a few exceptions. What I call exceptions are those that showed upward growth, but even those have not attained their pre-colonisation prosperity. Albeit there are a very few who have regained their economic prosperity and they are the exceptions.

The fundamental need of any economy is robust systems that enable capital to flow in a transparent and equitable manner. Now, often we would say EMDEs need external help to rebuild - of course, they do. But what if the FDI channel is not working due to various reasons? Then, should it be that they cannot grow and achieve prosperity? They can - is my argument.

It requires a systemic view of the problem. The economic goods and services a country requires need to be classified into layers and arranged into a pyramid somewhat similar to Maslow's hierarchy of human needs. The activities at the bottom of the pyramid should be those that do not need too much capital to start and thrive. (Growing food does not require a lot of capital; it needs patient nurturing, and any part of the world can produce its own food domestically.) This capital can easily come from the domestic market. The problem lies in the business of credit, which is biased and ineffective. It lacks transparency and accuracy. The moment we adopt authentic ways to measure credit risk that also include compliance and, even better, authentic ESG if available but not mandatory to begin with, when the basic and fundamental need for fair capital is lacking, we would bring inclusion, growth and prosperity in unimaginable ways. We would strengthen the base of the pyramid without the need for FDI. Just the domestic capital would do. The major problem of the financial system is the inaccurate credit risk quantification, which was at the root of the last financial crisis and also the reason for limited access to affordable capital in EMDEs. To reduce the cost of capital guarantees, grants, and any concessional finance, leveraging an accurate measure of holistic credit risk can dramatically shift the equation in which EMDEs have been stuck for decades, even centuries. Gradually introducing authentic ESG would be so easy in this approach.

To rebuild the countries previously colonised, we simply need to strengthen domestic capital flow to economic goods and services in the priority they appear in the economic Maslow's hierarchy. With transparency and accuracy, credit can be made available equitably, and the cycle will begin in a healthy manner. The economy will grow from the bottom up in this pyramid of economic activities, and more capital-intensive projects will attract funds, even through the FDI channel, due to improved systems and the economy building in a robust manner with basic activities in place.