ments are located in multiple countries (384 of 2,509). In the data, these are tagged at the region level (e.g., Eastern Europe Region, Western Africa Region, World Region), rather than at the country level. When we conduct country-level analysis (Tables 6-8; 10-11), we omit these observations.

We briefly describe the unique geographic allocation of the equity portfolio by comparing the IFC’s portfolio cash deployed (i.e., contributions, as defined above) to FDI inflows reported by the United Nations Conference on Trade and Development (UNCTAD). FDI inflows, defined as the acquisition of an equity capital stake of 10 percent or more by investors resident in a country other than the one in which the enterprise is located, include most cross-border private equity investment whether by funds or through mergers and acquisitions.

Table 1 reports the country allocation of IFC investment and FDI in constant dollars broken down by whether countries were classified by the IMF in 2019 as “advanced economies” or “emerging market and developing economies” (EMDEs).<sup>9</sup> Overall, IFC equity investment accounts for 0.09 percent of global FDI. Unlike FDI, the IFC has focused entirely on EMDEs, with 97.7 percent of its cash deployed in current EMDEs and 2.3 percent in countries that have since transitioned to advanced economy status, including the Czech Republic, Greece, and the Republic of Korea. In contrast, 61.3 percent of FDI has gone to advanced economies in which the IFC has never deployed cash, such as the United States (which has received 18 percent of total FDI), United Kingdom (6.9 percent), and Hong Kong SAR, China (4.3 percent). Nor has the IFC deployed equity investment in certain jurisdictions through which some FDI into EMDEs is indirectly channeled (Coppola et al, 2021), namely, the British Virgin Islands (2.2 percent of total FDI), Cayman Islands (1.5 percent), and United Arab Emirates (0.4 percent). In terms of geographic diversification within EMDEs, the IFC’s portfolio is more diversified than FDI and public equity investment references.<sup>10</sup>

**Performance Measurement Using the Public Market Equivalent (PME)** Cash flows are used to calculate the financial performance of the entire portfolio as well as of the investment in each company (or fund). The cash flow stream is divided into positive and negative parts respectively termed distributions ( _dist_ ( _t_ )) and contributions ( _cont_ ( _t_ )). Distributions are the cash flows returned to the IFC through dividend payments or the sale of a company’s shares. For investments still held in the portfolio, we treat the net asset value on June 30, 2019 as a positive distribution, that is, as if the investment is liquidated on that date at its fair value. Contributions

> 9Throughout the paper we use the short-hand of emerging markets to refer to countries in our sample.

> 10As of June 2020, five economies—Brazil, China, India, Korea, and Taiwan (China)—accounted for more than 75 percent of holdings in the MSCI Emerging Market stock index. East Asia and the Pacific together with Latin America and the Caribbean (defined using World Bank regional classifications) attracted 54.0 percent of FDI in EMDEs in which the IFC has invested, compared to only 41.4 percent of the IFC’s total equity investment since 1956. Whereas 11.3 percent of the IFC’s investment has gone to Sub-Saharan Africa, the continent received only 5.3 percent of FDI among countries in which the IFC has invested. Looking at the largest FDI destinations in each region, the IFC is underweight in China (9.3 percent vs. 19.5 percent of FDI in EMDEs in which the IFC has invested), Brazil (6.5 percent vs. 9.0 percent), Nigeria (1.0 percent vs. 1.1 percent), and Saudi Arabia (0.2 percent vs. 2.3 percent), and overweight in India (9.6 percent vs. 4.3 percent) and the Russian Federation (5.4 percent vs. 4.6 percent).

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