Since 2015, CIPE has observed authoritarian governments pursuing international investment agendas as a means to exert influence and undermine markets in emerging democracies around the world. These investments pose a systemic threat to democracies and free and inclusive markets. CIPE has coined this investment “Corrosive Capital.” Historically, Corrosive Capital flows stem from authoritarian regimes and are inextricably linked to adverse governance outcomes in recipient countries. Corrosive Capital infiltrates vulnerable democracies, inciting debt dependencies, achieving underlying political motives, and yielding negative impacts on local communities and private sectors. These flows enter recipient countries through exploitable legal structures and are safeguarded and enabled by corruption and cronyism. As a result, recipient countries frequently fall into economic coercion and political manipulation, and private sectors become less secure and more volatile. Over time, Corrosive Capital begets more Corrosive Capital and crowds out Constructive Capital, leaving recipient countries exposed to the subversion of their interests.
To counter Corrosive Capital, CIPE works to mitigate its impact on democratic governance and human rights by mapping foreign investment activities and identifying key characteristics of investment. CIPE designs programs that increase global awareness, strengthens democratic institutions, and safeguards citizens’ interests, ensuring a fair playing field for all businesses.
In the long-term, CIPE is working to create transparent, accountable, and market-based conditions to attract Constructive Capital into a recipient economy. CIPE and its partners work to unite a strong business community committed to clear and transparent market rules to create a level playing field.
To advance these goals, we must understand the nature of the problem. Corrosive Capital is a novel threat with room for further debate, analysis, and findings. This literature review establishes the degree to which scholarship on Corrosive Capital exists, and the degree to which it does not. We examine the main schools of thought, prominent and emerging cases, and where applicable, debates. To conclude this review, we identify knowledge gaps that current scholarship and analysis have yet to address. We hope that these knowledge gaps can direct future research, analysis, and programs to formulate a sophisticated and nuanced understanding and approach to promote Constructive Capital and mitigate Corrosive Capital.