IFC Discussion Papers
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The International Finance Corporation (IFC), an affiliate of the World Bank, promotes the economic development of its member countries through investment in the private sector. It is the world's largest multilateral organization providing financial assistance directly in the form of loan and equity to private enterprises in developing countries. These discussion papers present trends in private sector investment. They are circulated to encourage discussion and comment. Papers for which rapid publication is particularly important were often issued in this series. IFC Discussion Papers were discontinued in 2001.
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Trends in Private Investment in Developing Countries : Statistics for 1970-2000 and the Impact on Private Investment of Corruption and the Quality of Public Investment(Washington, DC: World Bank and the International Finance Corporation, 2001-09) Everhart, Stephen S. ; Sumlinski, Mariusz A.The report is part of the continued investigation on the public-private investment relationship, and its focus for this year is on the quality of public investment, its interaction with corruption, and the resulting impact on private investment. The first chapter provides statistics on trends in private, and public fixed investment in sixty three developing countries, with a substantially expanded sample coverage of the Eastern Europe and Central Asia Region, as well as some smaller economies of the Latin America and Caribbean Region. On average, the ratio of private investment to GDP, declined in 1999 compared to 1998, while public investment increased in simple average terms, and remained at 1998 levels in weighted average terms. The 1999 decline brings investment ratios back to their 1995 level, and, preliminary (incomplete) estimates for 2000, suggest that private investment may be poised for a return to growth. The second chapter examines whether higher levels of public investment are associated with higher, or lower levels of private investment, the impact of corruption on this relationship, and the long-run implications for growth, and sustainable development. The paper is consistent with the hypothesis that corruption lowers the quality of public investment, and that this reduced quality is associated with lower private investment.
Firm Size and the Business Environment : Worldwide Survey Results(Washington, DC: World Bank and the International Finance Corporation, 2001-08) Schiffer, Mirjam ; Weder, BeatriceThe development of the small, and medium enterprise sector is believed to be crucial for economic growth, and poverty alleviation. Those who seek to develop the sector, must consent with the general perception that small- and medium-scale enterprises are at a disadvantage, compared with larger firms. In theory, however, smaller firms may also have advantages over larger firms. For instance, they may be less affected by excessive regulations, because they can easily slip into informal arrangements. This paper draws on a new private sector survey covering eighty countries, and one territory to study the question whether business obstacles are related to firm size. The main finding is that there is indeed a bias against small firms. Overall, (that is, for the world sample) small firms report more problems than medium-sized firms, which in turn report more problems than large firms. In particular, smaller firms face significantly more problems than larger firms with financing, taxes and regulations, inflation, corruption and street crime. Thus these impediments should be prime targets for policies directed at leveling the playing field. Some of the most severe perceived impediments to doing business affect firms of all sizes, and consequently call for across-the-board policy improvements. In addition to the worldwide analysis, the paper presents an analysis by region, and by individual country.
Leapfrogging? India's Information Technology Industry and the Internet(Washington, DC: World Bank and the International Finance Corporation, 2001-05) Miller, Robert R.The Internet has been seen by numerous observers, as a set of technologies that might enable developing countries to "leapfrog" over the development path, taken by industrial countries, enabling poorer countries to increase their rates of growth, and "catch up" sooner. Using India as a case study, this paper reviews the degree to which that promise might be realized. The paper concludes that while internet development in India is still at a very early stage in terms of numbers of connections, and overall use, the promise it offers for increased productivity, and economic growth, is likely to be significant. Most benefits are likely to come from business use of the internet for both internal control, and for dealing with business customers, not from customer use. In particular, global connections will be much enhanced by India's liberalized access to international internet gateways, and to privately-provided undersea cable access. This access alone could offer Indian companies, business opportunities that otherwise would flow to other, better connected Asian competitors. However, poor infrastructure, along with low public investment, remains a difficult problem to overcome. And, although technical education has been a bright spot, India's overall educational attainment is low in demographic terms, and illiteracy will critically limit "leapfrogging" the anticipated expansion of the internet. Rather, economic growth depends on complementary interactions between the private sector, and the government's adequate provision of public goods.
Trends in Private Investment in Developing Countries : Statistics for 1970-1998(Washington, DC: World Bank and the International Finance Corporation, 2000-06) Bouton, Lawrence ; Sumlinski, Mariusz A.This discussion paper examines in its first part, the role of private investment in economic growth. While theoretical growth models developed in the economics literature, make no distinction between private, and public components of investment, there is an emerging appreciation that private investment is more efficient, and productive tan public investment. Results from the recent empirical literature, updated here with the recent data on private investment, suggest that private investment has a stronger association with long run economic growth than public investment. The second part shows trends in private, and public fixed investment in fifty developing countries. On average, the ratio of private investment to GDP continued its upward trend, reaching record levels in 1998, the most recent year for which comparable data exist. That year, average private investment reached 14.3 percent of GDP, but public investment, fell to only 7.0 percent of GDP, its lowest level since 1974.