Direct foreign investment in Caribbean businesses and infrastructure, mediated through development finance institutions rather than government-to-government transfers, has a stronger evidence base for producing development impact than budget support to governments.
British International Investment, formerly CDC Group, invests in private sector development in emerging markets including the Caribbean. Its model involves equity and debt investment in companies and funds operating in developing markets, creating jobs and building business capacity through market mechanisms rather than through grant funding. Significantly increasing its mandate and resources for Caribbean investment would create economic activity and employment through channels that are more directly linked to productive activity than reparations payments to government budgets.
Private sector investment also has an inherent accountability advantage. Companies that receive investment must demonstrate returns. The discipline of commercial accountability, however imperfect, provides a check on waste and misallocation that grant funding to governments lacks. Investment that creates jobs can be measured. Investment that builds infrastructure can be seen. The beneficiaries are identifiable.
This is not a complete answer to Caribbean development challenges. Private investment flows to opportunities, and not all development needs are commercially attractive. But as one component of a practical engagement strategy, direct investment offers a more reliable link between British resources and Caribbean benefit than government-to-government transfers.
