The Wall Street Consensus is an elaborate effort to reorganize development interventions around partnerships with global finance. The Billions to Trillions agenda, the World Bank’s Maximising Finance for Development or the G20’s Infrastructure as an Asset Class all call on international development institutions and governments of poor countries to ‘escort capital’ – institutional investors and the managers of their trillions in assets – into investable development assets. For this, ten policy commandments aim to forge the de-risking state and accelerate the structural transformation of local financial systems towards market-based finance. The state risk-proofs development assets for institutional investors by taking on its balance sheet: (i) demand risks attached to commodified (social) infrastructure assets, (ii) political risk attached to policies that would threaten profits such as nationalization, higher minimum wages and climate regulation, (iii) climate risks that may become part of regulatory frameworks; (iv) bond and currency markets risks that complicate investors’ exit. The new ‘development as derisking’ paradigm narrows the scope for a green developmental state that could design a just transition to low-carbon economies.
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Daniela Gabor (2020) studied this question.