Economics & Development

This document relates to the IFC Project Number 53096.

Private school enrollment is expanding rapidly across the globe — today, one in five K-12 students pays out of pocket to attend private school, with even higher rates in low- and middle-income countries (LMICs). This growth has created both opportunity and risk: private schools can offer choice and improve learning through innovation, but unregulated expansion risks deepening inequality. This note draws on the latest evidence and offers a balanced policy framework to help LMIC governments navigate this tension. It centers on four roles for policymakers: (1) creating an enabling environment that lowers barriers for responsible providers; (2) establishing and enforcing minimum quality and safety standards; (3) designing financing mechanisms that promote equity and crowd-in investment; and (4) strengthening system-wide incentives through transparent information and accountability. Together, these pillars provide the foundational infrastructure needed to keep learners at the center, capturing the benefits of private innovation while effectively managing its risks.

This paper reexamines aid effectiveness using ex-post economic rates of return from 2,500 World Bank–financed infrastructure projects over six decades. Three facts emerge. First, average value creation is high: the mean economic rate of return is 24 percent (median 18.5 percent). Second, returns rise over time: after relative stability through the mid‑1980s, economic rates of return increased from the late 1980s onward, consistent with improved selection, design, and delivery. Third, economic rates of return are systematically higher in countries with weak institutions. In such countries, high-quality World Bank performance is associated with about a 12‑point increase in the average economic rate of return. A plausible mechanism is talent deployment. Higher‑quality task team leaders are disproportionately assigned to the most challenging contexts and linked to faster time‑to‑effectiveness and higher economic rates of return, despite longer, more intensive implementation. Overall, alongside country fundamentals, World Bank performance and talent deployment materially raise returns to scarce capital—especially where governance is weak.