The Future of Private Finance for Development in Poor Countries

Produced by: 
Inter-American Development Bank
Available from: 
December 2020
Paper author(s): 
Nancy Lee
Mauricio Cardenas Gonzalez
Financial Economics

This paper reviews data on private development finance flows in poor countries, identifies the lessons and questions that should shape future efforts to mobilize more finance, and develops proposals to strengthen performance. The data reveal a sobering picture. The vast majority of finance from development finance institutions (DFIs) goes to middle-income countries, including concessional finance as part of blended finance transactions. Global infrastructure transactions with private participation in poor countries are stuck below $15 billion and show no upward trend. Foreign direct investment as a share of GDP is trending downward and private portfolio inflows remain negligible and volatile. With pandemic financing needs layered on top of huge financing gaps for the Sustainable Development Goals, the development finance architecture is just not mobilizing private investment in poor countries on the scale needed.


Research section: 
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