WASHINGTON, D.C., Feb. 14--Private investment in developing countries continued its 10-year upward trend in 1995 reflecting the increasing role played by market forces in these countries, the International Finance Corporation (IFC) reported.
Private investment in developing countries has increased from about 12 percent of GDP in 1985 to nearly 18 percent of GDP in 1995, the last year for which data are available. Only a decade ago, the importance placed on the role of the state was reflected in an overall public sector investment-to-GDP ratio that averaged 10 percent of GDP. This ratio has fallen to about 6 percent of GDP in 1995.
The eighth annual edition of "Trends in Private Investment in Developing Countries" updates data on private and public fixed investment through 1995. In addition to presenting the latest investment statistics, this year's edition focuses on the impact of the sale of state enterprises on private fixed investment. It finds that privatization results in increased private investment and is, therefore, an important ingredient of governments' efforts to improve the business climate and to step up the pace of economic development.
According to the report, there remains a wide disparity in investment performance across regions. East Asia continued to maintain the highest levels of private investment and is the only region in which public investment has been increasing in recent years. Latin America shows the second highest rate, but, unlike other regions, experienced a decline in private investment in 1995, particularly in Argentina and Mexico. In 1995, Sub-Saharan Africa experienced its first significant increase in private investment since 1990. At less than 10 percent of GDP, the levels of private investment in this region are still among the lowest in the world. South Asia also has low levels of private investment. Data just released for India, however, show a significant increase in private investment in 1995. These and other trends are updated in this latest edition.
IFC is a member of the World Bank Group created in 1956 to encourage the growth of a healthy private sector in developing nations. It does so by financing business in partnership with private investors, and by fostering conditions that stimulate investment such as domestic financial institutions and capital markets.
Copies of the report may be obtained form the World Bank Bookstore (tel. (202) 473-2941) or by visiting the Economics Department's web page (http://www.ifc.org/ DEPTS/OPS/ECON/ECONHOM.HTM). Press copies can be obtained by calling Maybelle Pacis (202) 473-3969.
