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Is the Level of Financial Sector Development a Key Determinant of Private Investment in the Power Sector?This paper seeks to assess the extent to which a country's overall level of development and that of its financial sector, in particular, are factors that attract private capital into infrastructure projects. The authors investigate these effects in a 1990-2007 dataset on the power sector in 37 developing countries. The results suggest that economic growth is a key determinant of private investors' investment in infrastructure projects, and that investors tend to take countries governance quality into account in their decisions to invest. The empirical results highlight that the development of the financial sector also plays a significant role in private investors' decisions to enter infrastructure sectors. In particular, the degree of country risk and exchange rate volatility is found to be negatively related to the volume of private sector investment in power projects. Furthermore, when the banking sector and the capital market are separately treated in the analysis, the existence of a well functioning capital market is the main attracting factor. In addition, the existence of an independent energy regulatory authority significantly improves the level of private investors' implication in energy projects. When accounting for the interactions between the overall economic development and the financial sector development variables, the effects of these variables are still significant and the results also confirm the importance of an independent energy sector regulator.
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The World Bank Group's Response
 to the Global Economic Crisis : Phase 1The global economic crisis that began in
 2008 threatened to erase years of progress in developing
 countries. In response, the World Bank Group increased
 lending to unprecedented levels. The World Bank posted a
 large increase in middle income countries (MICs), and a much
 smaller one in low income countries (LICs). The
 International Finance Corporation (IFC) focused on trade
 finance, mainly in LICs. Its new business initially fell in
 MICs, rebounding only in late fiscal 2010. The Multilateral
 Investment Guarantee Agency (MIGA) concentrated on
 guarantees in Eastern Europe. Analytic and advisory work
 helped inform government and private sector responses to the
 crisis. This report presents an initial real-time evaluation
 of the readiness, relevance, quality-at-entry, short-term
 results, and likely sustainability of the Bank Group
 response from the start of the crisis through fiscal 2010.
 This evaluation builds on a 2008 Independent Evaluation
 Group (IEG) assessment of Bank Group interventions during
 past crises and draws extensively on 11 country case studies
 and field visits. Given the short time since the crisis
 response started, the evaluation is geared more to raising
 flags than to presenting definitive conclusions.
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Financing for Development Post-2015This paper is a contribution to United Nation (UN)-led efforts to articulate a post-2015 development framework, building on the Millennium Declaration and Millennium Development Goals (MDGs). It focuses on the challenge of financing development goals and complements the extensive work conducted by the United Nations1 and other institutions, including the World Bank Group. The paper is structured as follows. Section one outlines elements of what it will take to achieve development outcomes, the importance of a global development cooperation framework, the role of targeted, evidence-based policies and sound institutions; and the mobilization of resources for global public goods. Section two focuses on how best to support developing countries in mobilizing domestic resources for development, by boosting taxation capacity, harnessing natural resource revenue, improving expenditure efficiency, and curbing illicit financial flows. Section three examines issues of aid effectiveness and considers ways for development actors to provide better and smarter aid. Section four discusses trends in private financial flows to developing countries and the growing mismatch between available financing and investment needs. It then turns to strategies for mobilizing financing for long-term infrastructure. Finally, section five explores a range of emerging and innovative sources of finance, and the role an inclusive financial system can play to promote development.