The landscape of development finance is rapidly changing.
In the last decade, major emerging economies such as China and Brazil have been fueling a growing trend of South-South flows by increasingly channeling their overseas investments to other developing countries. In line with these new trends, China and Brazil are surfacing as major international investors.
Some of these investments constitute large-scale, high impact projects requiring access to and management of natural resources. Others comprise small and medium size projects developed by private small-medium enterprises (SMEs). The projects are reshaping the relationship between investors and recipient countries, as well as posing new challenges and opportunities for environmental and social sustainability initiatives.
The Emerging Actors in Development Finance project explores questions on how Chinese and Brazilian investments impact development finance, the environment and society; unique characteristics that China and Brazil display in their approach to environmental and social sustainability; sustainable development opportunities that can be created for both investor and host countries; and how the environmental and social risks of increasing outward foreign direct investment (OFDI) can be managed
A Changing Global Landscape
China is surfacing as a major international investor through large corporations, SMEs, and nationally owned financial institutions such as the Export-Import Bank of China and the China Development Bank.
These Chinese “emerging actors” are financing major initiatives to acquire natural resources, open markets, and forge strategic political ties. They are increasingly financing large-scale, high impact projects beyond their borders — such as hydropower plants, mining, oil and gas pipelines — which may pose new challenges for environmental and social sustainability.
At the same time, from 2001 to 2011, Brazil’s per capita GDP more than tripled. At the heart of this domestic economic boom is the Brazilian National Development Bank (BNDES).
How do we ensure that China’s and Brazil’s investments align with sustainability objectives by observing high social and environmental standards?