At least in the case of Japan, nothing. A couple of barriers in the Old Boy network of Japanese finance keep private investors from fully participating in the market there. First, the powers that be really don’t want to be beholden to small shareholders, so in many cases it is difficult or impossible to buy less than 100 shares at a time – making investing expensive and riskier for individuals by decreasing the ability to diversify. DRIPs were unheard of when I lived there about 5 years ago.

Real Estate is still held closely by developers and the descendants of the samurai class. the Japanese long prided themselves on their post war egalitarianism, but in reality the rich hide their wealth. A minor samurai family I know used to have a very small estate in Edo, about 40 acres. It is now in a business district in Tokyo, and the businesses now located there provide the family with millions of dollars in income. In that kind of market with huge population pressure and the remnants of feudal landholding still in evidence, real estate is not a truly free market, so small investor money can’t flow there for higher returns.

Add to all of this the Japanese tendency to avoid risk and follow the crowd, you find that most people invest in big banks at low (less than 1% when I lived there) interest, or, in the case of the Post office (WTF* is the post office doing in the banking business anyway?!?) zero point zero interest, and you need to save at a tremendous rate in order to build any retirement wealth because your ROI is diddley times squat.

Sure they would prefer to get higher interest, but there is no alternative – the banks are a big oligopoly (even more so after the 2002-4 spate of mergers); the Post Office used to regularly make loans to state-identified critical business at zero percent interest, and thus could not give any ROI to the investors, and most Japanese are too frightened of risk to go offshore for higher yielding instruments. Those who might be less risk averse are usually wealthy enough to get in on sweet deals afforded by the domestic Old Boy network.

* I know the historical answer to this question, but it still boggles my mind, even if the Japan Post is about an order of magnitude more polite and efficient than ours.

The Indian PM says the country needs $320B in “infrastructure” investment over the next 5 years to lift growth to 10%/yr. Not clear if the $320B includes all of the $150B, or not.

I agree that Grameen-style microcredit has much to be said for it…wonder if any of this is going on in China?

The rate of return on investment is what I’m missing in the above analysis, and I submit that China and India can both develop quite quickly without slurping up too much capital thru wiser investment.
(Aid, of course, often has no return on investment, and in fact a negative return in that it teaches corruption.)

Investing in good projects, or a high yield portfolio (1 in 5 making 10x returns, perhaps) of projects is exactly what creates wealth.

Grameen bank-style micro-loans both have good returns and hugely increase the velocity of the money as well as the production quantity, especially for local consumption.