Why Some Countries Attract Capital and Some Don’t

Nobody wants to invest in a legal minefield.

Businesses can navigate taxes, tariffs, and even political uncertainty. What they struggle to navigate is arbitrariness - a system where the rules are unclear, contracts are unreliable, and outcomes depend on who holds power.

The rule of law is what turns a market into a place where companies are willing to commit capital. It provides the predictability that businesses need to invest, hire, and plan for the long term. When that predictability weakens, the economic costs are never far behind.

The U.S. Chamber’s Coalition for the Rule of Law in Global Markets has identified five legal and institutional pillars required to build a healthy business and investment environment: predictability, stability, accountability, due process, and transparency.

These pillars are the often-overlooked infrastructure of economic growth. When they are strong, markets benefit from a level playing field, institutional trust, and transparent legal processes - giving businesses and investors the confidence to commit capital and plan for the long term.

Since 2013, our Coalition has tracked the principles across markets. The first edition covered ten countries in the Americas; the sixth edition of the Dashboard, to be released this month, covers 149 economies worldwide.

The findings are mixed. Across markets, transparency continues to improve. But the other pillars - predictability, stability, accountability, and due process - have weakened. That erosion carries real economic consequences.

The rule of law continues to be a growing concern at a moment of global uncertainty. Geopolitical fragmentation, shifting trade patterns, rapid technological: all these dynamics are testing legal systems around the world. Yet even as markets evolve, the rule of law remains a constant requirement for economic success.

Mexico offers a telling example. Bloomberg columnist Juan Pablo Spinetto argues that the country's judicial overhaul and the elimination of autonomous regulatory bodies have dealt a "devastating blow to Mexico's investment climate." The Bank of Mexico’s recent survey of economists (figure 3) found respondents said the moment is either inopportune or uncertain to invest in the country. Vanishingly few had positive responses.

As my colleague Neil Herrington, Senior Vice President and head of the U.S. Chamber's Americas practice—and this week's guest on The Call—recently observed, "American businesses depend on respect for the rule of law as the foundation of a vibrant investment climate." His comments, made in the context of Mexico's legal reforms, underscore a broader reality: strong legal institutions are not a luxury. They are a prerequisite for growth.

Predictable Performers

Other markets are improving. Poland, for example, is unwinding a decade of judicial overreach, and as a result the European Union has released nearly sixty billion euros tied to that reform commitment. A decisive anti-corruption campaign has also boosted confidence in the Dominican Republic, which has cemented its position as one of the top investment destinations in the Caribbean.

The rulebook is not abstract – it shapes where capital goes.

Our data tracks this directly. Markets with strong rules attract more investment. For instance, some markets are "predictable performers" with consistent results across all the pillars, offering stable conditions for long-term investment. Others present high potential paired with high variance, where targeted reform can make a decisive difference.

Crucial Signpost

When legal systems erode, by contrast, or when property rights are not respected, contracts lose their meaning, and competitiveness gives way to arbitrary decisions that hurt business. Budgets inflate, shocks multiply.

Our work confirms that the countries that attract investment are not always those with the lowest costs or largest markets. Increasingly, they are the ones that provide clear rules, transparent institutions, and confidence that those rules will be applied fairly.

For a nation seeking growth, this is the moment to demonstrate competitive advantage. If you want to attract investment and create jobs, you care about the rule of law. And as the world faces new dynamics, the moment requires the conditions that lead to where we all want to go - strong markets and thriving societies.

Our Dashboard offers a crucial signpost on how to get there.

About the author

Lesly Henderson-Rubio