The Ajaokuta steel factory in 1994We are enthusiastic about the growing interest in supporting private investment in developing countries, but it matters a lot how this is done. The tools that donor countries usually use to “crowd in” the private sector — guarantees and cheap loans — distort firms’ incentives by reducing their risks or increasing their rewards irrespective of how well they do. Donors should not pick winners.

Original source – Owen abroad » Blog

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