This paper is the outcome of a project commissioned by EAD. The main premise of the study is that much effort by governments, aid donors, international financial institutions (IFIS) and regional development banks has been expended for improving the climate for private investment. However the reality is that the least developed, small and vulnerable economies face particular problems in attracting private investment. The report considers the practicalities of developing market friendly financial instruments as a way of providing an incentive to investors in these economies. It has been the subject of intense consultation with both governments and IFIs.