Growing Business or Development Priority? Multilateral Development Banks' Direct Support to Private Firms

A growing share of the Multilateral Development Banks’ (MDBs) business involves private firms. Lending to, investing in and guaranteeing private firms accounted for more than a third of MDB financial operations in 2008, up from less than a fifth at the start of the decade. What’s driving this surge? Is it appropriate to use scarce global public resources to invest in private firms? Is it good for development? This new CGD report by Guillermo Perry, a former finance minister in Colombia and World Bank chief economist for Latin America, examines this trend. The report identifies the activities, firms, sectors and countries benefiting from the MDB’s private sector operations and explores whether it catalyzes or competes with private financial markets. Perry explores how governments and private firms can benefit, while avoiding conflicts of interest. He concludes the report with a proposed agenda for MDB-private sector activity.