Judicial capacity building is recognized as a vital element of development policy. However, with resources for (judicial) capacity building being limited, this paper seeks to address first the question of why states should dedicate the limited resources available to invest in capacity building through international arbitration. Second, if such investment is to be made, what should be the focus of capacity building efforts in order to achieve the best long-term success? In answering these questions, this paper posits that international arbitration should be considered by states as a pivotal element of judicial capacity building because it contributes to an effective judiciary and political stability, in turn enabling the state to better attract foreign direct investment (FDI). A well-functioning legal framework for international arbitration may act as a catalyst for FDI by boosting investor confidence and economic development. Countries with robust arbitration frameworks may be able to attract significant FDI despite inefficiencies in their domestic judicial systems. The availability of effective dispute resolution mechanisms also fosters political stability and economic development by strengthening the rule of law and contributes to maintaining public confidence and social stability. For successful capacity building, all stakeholders—including government officials, legislators, the judiciary, lawyers, and arbitrators—must be involved. Training government officials ensures informed policy-making, while judicial training ensures that the established arbitration framework properly functions in practice. Training local practitioners and arbitrators fosters acceptance and trust in arbitration. Lastly, robust arbitral institutions are crucial in capacity building. They fulfill this role not only through knowledge-sharing and training initiatives but also by acting as intermediaries between the parties and the arbitral tribunal. In this capacity, strong arbitral institutions foster trust in the arbitral process by ensuring the quality of selected arbitrators and maintaining a high standard of arbitral awards.