Capital Markets for Innovation: Unlocking Science and Technology Investment in Developing Countries

As the global community prepares for the United Nations Fourth International Conference on Financing for Development (FfD4), aligning capital flows with the Sustainable Development Goals (SDGs) has become increasingly urgent. Among the most significant gaps in development finance is the systemic underinvestment in science, technology, and innovation (STI) across developing countries.

Despite its proven potential to drive transformative progress, from strengthening climate resilience and health systems to fostering economic diversification and digital inclusion, STI remains largely disconnected from mainstream capital market strategies. This session addresses that gap with a bold proposition: to reposition STI not as a cost but as a high-impact investment class.

Recent global shifts, including the relocation of scientific talent from the United States to Europe in response to changing policy priorities (as highlighted in a 27 March 2025 Economist article), underscore how capital availability and political environments shape global innovation ecosystems. While high-income countries are navigating their internal realignments, developing nations are presented with a unique opportunity: to attract talent and establish themselves as STI frontrunners, provided they can access the right financial infrastructure.

This high-level event will explore how capital markets can mobilise funding for STI ecosystems in the Global South, scaling up solutions across digital infrastructure, clean tech investments, health innovation, and advanced manufacturing. It will convene leaders from science, finance, industry, and policymakers to examine:

• Financial regulations and risk-mitigation strategies for STI investment and de-risking.
• The catalytic role of multilateral development banks and blended finance to partner with investors and banks to deploy sustainable infrastructure.
• Public-private models and novel partnerships to unlock private capital and mitigate risks in developing economies.
• Innovative financial instruments and vehicles (e.g., IP-backed securities, R&D bonds, securitisation)
• Innovative approaches to talent finance and monetising intellectual property.

The event will catalyse actionable insights and forge new pathways for sustainable investment in STI across developing countries.

Objectives and Expected Outcomes:

1. Policy Recommendations for FfD4:

Deliver a concise set of actionable policy proposals for FfD4 delegates and negotiators, outlining how STI investment can be mainstreamed within global and national financing strategies, alongside traditional infrastructure, climate, and social sectors.

2. Launch of a Multi-Stakeholder Initiative on STI Finance:

Form a cross-sector working group to co-develop a Global Initiative on STI Finance, to be formally launched at the 2026 UN Pact for the Future Summit Plenary during UNGA80 and integrated into the Global Digital Compact and broader UN processes.

3. Strengthened Public-Private Partnerships:

Facilitate new collaborations among development finance institutions, private investors, innovation agencies, and governments to scale blended finance models and STI infrastructure investment platforms for the Global South.

4. Development of a Science Capital Markets Blueprint:

Produce a working “Science Capital Markets Blueprint” identifying pathways for scaling STI investments through instruments such as IP-backed securities, R&D bonds, securitization structures, and innovative risk-sharing mechanisms.

5. Policy Development Inputs:

Generate concrete policy inputs and legislative recommendations for key bodies, including the European Parliament, the United States Congress, African Union institutions, and other regional bodies advancing science-led sustainable development.

6. Contributions to UN Frameworks:

Provide substantive recommendations to the Second Edition of the United Nations Guidebook for the Preparation of Science, Technology and Innovation (STI) for SDGs Roadmaps, ensuring financial strategies for STI ecosystems are incorporated.

7. Talent Finance and Mobility Proposals:

Advance proposals for innovative mechanisms to finance scientific talent pipelines and enhance knowledge mobility between the Global South and Global North, aligning with the ambitions of the Pact for the Future.

8. Building Political Momentum:

Position STI investment as a key political priority for developing countries during the FfD4 negotiations and subsequent international development forums (G20, COP processes, World Investment Forum, etc.).

9. Follow-Up Presentation in Brussels:

The session’s outcomes will be presented to EU institutions on 14 October 2025 as part of ongoing advocacy to align global, European, and UN strategies on STI finance, ensuring strong continuity beyond FfD4.

This session aims to reposition STI investment as a cornerstone of development finance in the Global South—mobilising capital markets through market-based mechanisms to deliver long-term value, resilience, and inclusive growth.

Follow-Up:
Outcomes from this discussion will be presented to EU institutions in Brussels on 14 October 2025, as part of ongoing efforts to align global, EU and UN strategies on STI finance. A similar presentation will take place with the US Congress House of Representatives in February 2026.

Agenda

08:30 – 09:00 | Arrival and Registration

09:00 – 09:15 | Opening Remarks

Introductory reflections on the strategic role and understanding of STI investments in advancing sustainable development and the opportunity to build STI-focused sustainable infrastructure.

09:15 – 09:45 | Reimagining Capital for Global Challenges

Discussion on how capital markets can drive STI-led development in the Global South, with a focus on sustainable infrastructure, impact investing, and mobilising capital beyond aid.

09:45 – 10:15 | Policy Innovation and Financial Instruments

How market-based policy mechanisms and innovative instruments -such as blended finance, IP-backed securities, securitisation, risk-sharing mechanisms, and outcome-based funding- can de-risk and accelerate STI investment.

10:15 – 10:45 | Fireside Dialogue: Unlocking STI Investment – A Global South Perspective

A focused conversation offering insights from developing countries on opportunities and barriers to financing STI ecosystems.

10:45 – 11:00 | Closing Reflections and Next Steps

Summary of key takeaways and presentation of the pathway for feeding outcomes into the FfD4 process and subsequent consultations.