Over its history, the [World] Bank has made many efforts to adapt, re-invent and rationalize its role, especially given the development of the global financial markets. The complementarity between private and public global finance for development has been seen to stem from two main sources. First, the Bank can lend for things the private sector finds unattractive—projects with high social returns but low private returns. Second, the Bank can support private sector lending such as through information and credit guarantees, leveraging its own resources. The Bank’s role as a source of development knowledge underpins both sources of complementarity.

The Bank has long argued that the goals of its project lending are different to those of private financial institutions, with the Bank adopting a broader social welfare objective, emphasizing poverty reduction through equitable economic growth and delivering social services to poor people.  The rationale for the Bank’s role has rested on efficiency gains in the presence of market failures as much as on equity.

--Martin Ravallion, Center for Global Development

From the CIAO Database: