World Bank Capital Neither Complements Nor Substitutes for Private Capital
AbstractWhat should the World Bank optimally do with the US$10 to $20 billion it can loan each year? Has it, in fact, done what is optimal? These two questions, one theoretical and one empirical, have been around for a long time and remain controversial in both academic and policy circles. This study seeks to contribute to the debate by suggesting a simple framework within which to measure the World Bank against an optimal international public financier for development. It goes on to argue that a careful treatment of the empirical evidence on Bank lending strongly contradicts optimal behavior under different assumptions. The evidence, in fact, rejects any notion that the Bank has substituted for private capital or that it has successfully catalyzed private development finance. These questions of fact are separate from the normative issues of whether to “mend” or “end” the current system of multilateral development finance.
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Bibliographic InfoPaper provided by Center for Global Development in its series Working Papers with number 20.
Length: 54 pages
Date of creation: Dec 2002
Date of revision:
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Web page: http://www.cgdev.org
World Bank; private capital; multilateral development finance;
Find related papers by JEL classification:
- F35 - International Economics - - International Finance - - - Foreign Aid
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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- Derek D. Headey & Professor Christopher O`Donnell & D.S. Prasada Rao & Alan Duhs, 2004.
"All the Conditions of Effective Foreign Aid,"
CEPA Working Papers Series
WP082004, School of Economics, University of Queensland, Australia.
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