Private sector investment is increasingly financing economic development.

• In 2000, official overseas development assistance (ODA) to developing countries totaled US$53.1 billion and foreign direct investment (FDI) was $120 billion; developing countries average about one fourth of international foreign development assistance.

• In constant dollars, between 1970 and 1998, net inflows of foreign direct investment grew almost seven times faster than world GDP and four times faster than world exports of goods and services.

• Foreign direct investment in developing countries has risen from about US$24 billion in 1990 to US$178 billion in 2000 as flows of official development aid declined from about US$55 billion to US$39 billion.

• Between 1988 and 1995, revenues from the sale of state-owned-enterprises grew from US$2.6 billion to over US$21 billion. Latin America and East Asia generated the largest amount of revenues at 51% and 21% respectively.

• In 1999, the primary sector (including petroleum, mining, agriculture, and forestry) accounted for US$18.1 billion (41 percent of the total) privatization revenues in emerging economies -- almost entirely by oil and gas sales in Argentina, Brazil, India, Poland, and Russia.

Implications for business

Privatization has given business a greater say in the developing world's economic future. The private sector has eclipsed but not replaced government as the major financier of development but still does not serve the poorest nations.

Privatization focuses more attention upon the behavior of corporations and on the conditions that allow their license-to-operate. The expectation of the private ownership is to upgrade technologies, practices, and performance.

Inconsistent standards among domestic and foreign subsidiaries are becoming increasingly difficult to justify and to maintain. Still, the state retains significant influence over the economic and social well-being of developing countries and private sector enterprises will have to adjust to an emerging partnership between the public and private sectors.

Projections of population and economic growth mean that the investment opportunities of the past decade may be just a fraction of the potential future privatization markets.