𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐌𝐚𝐫𝐤𝐞𝐭𝐬 𝐃𝐫𝐢𝐯𝐞 𝐆𝐫𝐨𝐰𝐭𝐡 𝐀𝐧𝐝 𝐔𝐧𝐥𝐨𝐜𝐤 𝐎𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐢𝐞𝐬 𝐅𝐨𝐫 𝐘𝐨𝐮𝐭𝐡

…𝒂𝒄𝒄𝒆𝒔𝒔 𝒕𝒐 𝒂𝒇𝒇𝒐𝒓𝒅𝒂𝒃𝒍𝒆 𝒇𝒊𝒏𝒂𝒏𝒄𝒊𝒏𝒈 𝒂𝒏𝒅 𝒔𝒌𝒊𝒍𝒍-𝒃𝒂𝒔𝒆𝒅 𝒕𝒓𝒂𝒊𝒏𝒊𝒏𝒈 𝒉𝒆𝒍𝒑𝒔 𝒚𝒐𝒖𝒏𝒈 𝒆𝒏𝒕𝒓𝒆𝒑𝒓𝒆𝒏𝒆𝒖𝒓𝒔 𝒊𝒏𝒗𝒆𝒔𝒕, 𝒆𝒙𝒑𝒂𝒏𝒅, 𝒂𝒏𝒅 𝒄𝒓𝒆𝒂𝒕𝒆 𝒋𝒐𝒃𝒔

By Kezang Choden

According to a World Bank publication, well-functioning capital markets are proving to be a powerful engine for economic growth. They offer firms access to long-term and affordable financing while helping economies allocate resources more efficiently. New global evidence shows that companies in low- and middle-income countries are increasingly tapping bond and equity markets, narrowing a long-standing gap with high-income economies and unlocking fresh opportunities for expansion.

For decades, firms in developing economies have relied heavily on bank loans or retained earnings to finance investment. This dependence often came with higher costs, shorter repayment periods, and tighter credit constraints, limiting their ability to grow and innovate. In contrast, companies in advanced economies have long benefited from deep capital markets that provide diverse funding sources at competitive rates.

A recent study, Financing Firm Growth: The Role of Capital Markets in Low- and Middle-Income Countries, highlights a significant shift in this pattern. The analysis finds that since the early 2000s, firms from low- and middle-income countries have become more active participants in capital markets. Many of these companies are first-time issuers and are typically smaller, younger, and more productive than firms that previously accessed such financing.

The findings are based on a comprehensive database covering bond and equity issuances between 1990 and 2022. The dataset includes nearly 80,000 firms worldwide, with close to 20,000 firms from 106 low- and middle-income countries. The scale of the data allows for a detailed examination of how firms raise capital and how they use those funds after entering capital markets.

Evidence shows that companies are putting market-based financing to productive use. Firms that raise funds through bonds or equity invest more in physical assets, expand their workforce, and scale up operations. These firm-level gains translate into broader economic benefits, including higher productivity, job creation, and stronger growth at the national level.

The implications extend beyond individual businesses. For policymakers, the findings highlight the importance of developing robust capital market infrastructure, strengthening legal and regulatory frameworks, and improving transparency. Such reforms can attract investors, reduce financing costs, and support sustainable private sector growth. For investors, the expanding presence of firms from developing economies presents new opportunities to diversify portfolios while supporting growth in emerging markets.

Sonam Tobgay, a 29-year-old from Lhuentse Dzongkhag, has emerged as a symbol of youthful entrepreneurship rooted in Bhutan’s rich cultural heritage. By turning a traditional craft into a source of livelihood, he is not only preserving age-old skills but also creating opportunities for economic self-reliance.

Sonam’s interest in pottery began during his school years when he joined a mud pot-making club. What started as a simple extracurricular activity gradually developed into a serious passion and later a business idea. Today, he is engaged in producing a variety of traditional pots, combining cultural value with market demand. To support the growth of his business, Sonam and his team now produce a wider range of pottery items to attract more customers. He shared that they save a small portion of their earnings to reinvest in the business and to improve the livelihoods of those involved. According to him, steady reinvestment, even in small amounts, has helped them sustain production and gradually expand their reach.

Sonam emphasized that while many young people are willing to work, the lack of skill-based training and proper career guidance remains a major challenge. Without these, he said, it becomes difficult to meet customer expectations and market demands. He believes that practical training aligned with traditional skills can help bridge this gap and open up meaningful employment opportunities for youth.

He further noted that if he is able to meet customer demand consistently and earn a stable income, he plans to expand his business. Such expansion, he said, would allow him to create more job opportunities, particularly for young people in his community.

Covering 147 economies and drawing on data from tens of thousands of firms, the World Bank publication offers one of the most detailed assessments to date of capital market development across income levels. It makes a strong case that deeper and more inclusive capital markets are not only a feature of advanced economies but also a critical tool for unlocking growth potential in developing countries. As more firms gain access to these markets, capital markets are emerging as a key pillar in the economic transformation of low- and middle-income countries, reshaping how businesses finance growth and how economies build resilience for the future.

Thinley Jamtsho, a 31-year-old from Chukha Dzongkhag who is currently residing in Thimphu, shared his struggle to secure stable employment despite years of work experience. After completing Class Twelve, he went abroad and worked as a barista in Kuwait for two years, hoping the exposure and skills gained would help him build a better future back home.

However, upon returning, he found it difficult to secure a stable job with growth prospects. “I am hoping to find a job that matches my skills and provides long-term security,” he said. According to him, the challenge is not limited to his personal situation but reflects a broader issue faced by many young people in the country.

Thinley pointed out that limited business expansion and slow economic growth have reduced job opportunities, making it increasingly difficult for youths to find meaningful employment.

“I am struggling to find a stable job, and I know many youths are facing the same problem,” he said, adding that fewer businesses mean fewer job openings, which intensifies competition among job seekers.

He expressed concern that without stronger private sector growth and more employment-oriented initiatives, many educated and skilled youths may continue to face uncertainty. Thinley believes that creating an environment that supports business development and entrepreneurship is crucial to addressing youth unemployment and ensuring long-term economic stability. His experience highlights the growing need for sustainable job creation and targeted policies to support young people who are eager to contribute to the nation’s development but lack adequate opportunities.

The growing role of capital markets offers an important pathway for addressing some of the most pressing economic challenges faced by developing countries, including Bhutan. Global evidence from the World Bank shows that when firms gain access to long-term and affordable financing, they are better positioned to invest, expand, and create jobs, generating benefits that extend well beyond individual businesses. Strengthening capital markets, improving access to finance, and investing in skill-based training can help unlock entrepreneurial potential, stimulate job creation, and build a more resilient and inclusive economy for the future.