The World Bank’s International Finance Corporation and the Role of Private Entities in the World Bank’s Poverty Reduction Programs

Abstract

during this same period went from being one third the size of total official flows to developing countries, to more than double official flows.1 From multinational corporations to philanthropy to remittances, the private sector and private capital are finding their way into developing markets in greater numbers annually. However, this growing role in development raises many crucial concerns about the sustainability, redistributive powers, long-term scope, and environmental and social benefits of private sector investment. Much time and literature has been devoted to topics like microfinance and public-private partnerships in recent years, and depending on the perspective the private sector’s role in development can either seem like a silver bullet for poverty reduction that effectively evades corrupt governments, or a snatch-and-grab attempt by big business that increases inequality and reduces social standards and governability. While opinions vary, what is certain is that the private sector will continue to have a growing importance in development, and requires the attention of all concerned with development to determine just where their role lies. Through its International Finance Corporation (IFC), the World Bank has been engaging with the private sector on development work since 1956—long before the recent debate began—and an examination of its recent experiences provides key lessons on how best to engage the private sector

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