Selected for the Global Economic Symposium 2010

Post-conflict economies and many low-income countries such as Bangladesh, Rwanda or Haiti offer prospects for high returns. The African continent illustrates this well: untapped economic potential abounds. New research shows that attractive profits are made across the continent (e.g., Collier & Warnholz, Harvard Business Review,2009). However, investment flows outside of oil and mining have remained scarce and have taken a direct hit during the financial crisis. This group of economies is locked in a pervasive disequilibrium sustained by low expectations, a dismal reputation, high entry barriers and poor information. The creation of steady employment in formal enterprises is central to economic development and stability. The few successful companies in these markets merit attention. Factors that depress investment today may unravel as credible evidence of profitability shifts collective expectations.