Implementing the Proposed Solution

Middle-income and poor countries can break the impasse by taking the first steps themselves. They do not have to wait for Jane and people like her to act, and they do not need to call a press conference to announce their decision. A country that decides to attract investment from people like Jane would begin by taking several actions that would signal its intentions. These actions are:

Arrest and prosecute several high-profile white-collar criminals who have violated securities laws, committed fraud, or evaded taxes. This would have a political cost, but the payoff would be large if the country then gains inflows of portfolio investment. Jane herself might not notice, but managers of mutual funds and pension funds in New York and London will.