The Pursuit of Development: Economic Growth, Social Change, and Ideas by Ian Goldin

Author:Ian Goldin [Goldin, Ian]
Language: eng
Format: epub, pdf
ISBN: 9780198778035
Publisher: OxfordUP
Published: 2016-03-07T00:00:00+00:00

Since the 1990s private sector investment (including foreign investment) has become the principal source of finance for development for middle-income developing countries. For developing countries as a whole, foreign direct investment flows exceed global ODA flows by a factor of at least four in recent years (see Figure 8). Private equity flows—in which foreigners invest in funds which buy direct stakes in businesses in developing countries—have increased rapidly, with over $3 billion in private equity allocated for investment in a very wide range of African countries in the first six months of 2015 alone. Encouraging responsible private investment, not least in the countries where capital is lacking, requires the establishment of national and international rules, regulations, and norms. Institutions like the IFC and CDC, which are dedicated to development and are able to mobilize patient capital and identify opportunities for private investment in even the toughest environments, have a vital role to play in this regard.

Figure 8 Financial flows to developing countries—foreign aid, remittances, portfolio investment, and foreign direct investment (1970–2015).

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