The past several weeks have been momentous times for Egypt, Tunisia and many other countries in the Middle East and North Africa: regimes are toppling, the people are taking to the streets and protesting en masse, despots are quaking in their boots while world powers are scrambling to navigate the rapidly shifting political landscape.

Perhaps what has been most surprising is the speed at which these events have unfolded, nobody seemed to see any of this coming, particularly the US government, which appeared to have been caught flat-footed as evidenced by initial statements from President Obama and Secretary of State Clinton.  While it certainly has been encouraging to see the citizenry rise up and assert their human rights, it is important to note that the aftermath of any regime change may be protracted — it may take weeks, months, or perhaps even years before true stability returns to some of these countries. And sadly, there is no guarantee the regimes that replace the current crop will be any less autocratic (though we hope this is not the case).

So when we consider this region from a socially responsible investment perspective whether it be as a micro-financier, a venture capitalist, a non-profit aid organization or an individual investor the inevitable question arises: will the capital we invest help to deliver the social good we intend, particularly if the government in place is actively undermining these efforts?

There’s no question that foreign direct investment can benefit developing nations by spurring economic growth, relieving poverty, providing job and educational opportunities, improving basic healthcare and helping to build and support the conditions and institutions vital to a functioning free society. FDI can also be instrumental in improving a country’s infrastructure, particularly in the area of technology, which is essential for any economy hoping to compete in the information age (a question that has often been posed over the past few weeks is whether the events in Egypt could have even been possible if the people did not have access to social networking sites like Facebook or Twitter).

But while the potential benefits of FDI are clear, the degree to which these benefits are achieved can often times be murkier, particularly when dealing with corrupt governments that have been in power for in some cases decades. Investment dollars and state aid may be welcome by these leaders, but the Western cultural ideals and influence that may come with this capital often times is not.

So when those in the socially responsible investment community tackle this issue, there are two schools of thought that often emerge. These views resemble the sanctions-versus-engagement dilemma many developed nations face when confronting diplomacy issues with rogue states.

On one side, there’s the purist approach: investing in an autocratic nation not only explicitly endorses the regime’s authority and practices, but also helps to preserve the regime’s power and foster their growth. This investor tends to be more dogmatic in defining what constitutes a socially responsible investment and is less likely to compromise that view.

On the other side, there’s the pragmatic approach: investing in developing nations is by definition a messy endeavor and one cannot wait for the ideal environment to deploy capital because that environment may never arrive. A government will always have some level of corruption embedded in it, and even if a particular government is deemed acceptable, the nature of politics is fluid: the policies and practices in place today may not necessarily be the same ones in place tomorrow. So rather than wait for the country to meet certain baseline criteria, this investor seeks to take an active role in helping shape the country’s future by investing in companies or projects that they feel will have the greatest social impact.

So which approach is best?

Since socially responsible investing is often a subjective and deeply personal undertaking, there is no one right answer on how best to approach it.  What one socially responsible investor may find untenable another finds acceptable. So it falls to the individual or institution to decide what their mandate will be and how they will apply social and ethical principles to their investment decisions.

But regardless which approach is taken, what’s most important is that the end goal of all socially responsible investors is usually identical: use the resources at your disposal to, in the words of Gandhi, be the change you want to see in the world.

Image Credit: Mona

This article originally appeared on Just Means.