2.2. Why Mobilize Private Finance for Development?
The global development landscape is changing in profound ways. Huge pools of private capital - in developed and developing economies alike – have emerged and are looking for attractive investment opportunities.
While Official Development Assistance (ODA) has been flat in recent decades, private foreign direct investment has continued to grow. Even more remarkable is the growth in domestic private capital within developing economies (see graphic below). These resources have great potential to support economic development if directed towards suitable investments and opportunities, and mobilizing this abundant capital for development is emerging as a core element of strengthening countries’ ability to finance their development plans and strategies.
2 Sources: OECD, World Bank Remittances Data, International Monetary Fund (IMF) World Revenue Longitudinal Database (WoRLD), UNCTAD Stat and World Bank World Development Indicators (WDI), USAID analysis.
In addition to the growing abundance of private financial resources, other factors are prompting donors to shift their focus toward facilitating private investment, working to unlock market forces and transform private capital into investments that can advance development: