Assessing private sector contributions to job creation : IFC open source study

Data from International Finance Corporation’s (IFC’s) development outcome tracking system (DOTS) show strong job growth for companies financed through IFC - supported private equity (PE) funds. The nearly 500 companies covered in this analysis - in which the funds had invested about 4.0 billion dollars, of which more than 400 million dollars or 10 percent in financing came from IFC - created nearly 300,000 jobs between 2000 and 2010. Though job growth rates were higher for smaller companies, most jobs were created by larger companies. Job creation was also strongly and positively correlated with the returns of the funds, showing that good financial performance did not come from cutting jobs, but from expanding companies - their valuations, revenues, and jobs. The best job creation occurred when fund managers worked with companies with which they were familiar.