The Canadian Who Shaped IFC History

But what role did Lester B. Pearson play in IFC history?
Lester B. Pearson was Canada’s prime minister from 1963 to 1968. He is remembered in his country for many things:

• winning the 1957 Nobel Peace Prize, recognizing his work founding the UN peacekeeping forces and helping stop the Suez crisis that had threatened to start a new world war
• introducing the maple leaf flag
• having Toronto’s international airport named in his honor.

Less known, but perhaps no less important, is another fact about Pearson: he was responsible for a report that changed the course of IFC history.

The year was 1967. World Bank President George Woods asked Pearson to head a blue-ribbon panel on the future of development finance, the Commission on International Development. Its report, called “Partners in Development,” was released in 1969 and strongly endorsed by the new chief at 1818 H St., Robert McNamara.

Among the Pearson Report’s key points: IFC could have a powerful role in international development, but only if it stepped up its activities. At the time, IFC was still a relatively minor player, and the Pearson Report was one of the first major independent endorsements of its potential.

The report criticized the narrowly defined IFC of the 1960s for “overemphasizing profitability as an investment criterion and not taking project initiatives,” historian Jonas Haralz recalls. McNamara agreed, essentially saying that it was time for IFC to start thinking bigger. He called for changes that in many ways signaled the redefinition of IFC’s commitment to development impact.

There was one immediate result of McNamara’s backing of the Pearson Commission report. It was the hiring of IFC’s first economics adviser, a sharp-thinking IMF official from Pakistan named Moeen Qureshi who would later go on to become EVP.

Qureshi energized the intellectual environment in IFC, adding a new rigor of analysis to the IFC projects that until then had been evaluated almost exclusively on financial terms.

It was in this new environment that IFC, for example, brought in Wall Street venture capitalist David Gill to launch the Capital Markets Department, home to some of IFC’s most innovative work. Asian stock markets and banks that team helped start in the 1970s have since channeled billions of dollars from private investors into development finance, much of it from local sources. In many ways, this was the earliest foundational work for today’s emerging market investment boom: one that today has four dollars of private capital coming into the developing world for every dollar of foreign assistance, and growing worldwide interest in a more entrepreneurial, results-oriented approach to development. The Pearson Commission’s report thus can be considered “the springboard for a number of initiatives in a developmental direction,” in historian Haralz’s summation.

Looking back, IFC is fortunate to have been challenged to bigger and better things by a man such as Pearson, one whom the Nobel committee said “saved the world” in Suez.

This was also once said of Pearson: “although he never took himself too seriously, he took what he believed in very, very seriously, and turned those beliefs into action and achievement, again and again.”

When he died in December 1972 after a battle with cancer, the secretary to the commission said Pearson had led them by drawing out what was best in them. It was a comment that could apply to Pearson’s entire career, including his brief contribution to IFC.

If you have an idea for a “postcard from the past,” please email Celeste Diaz Ferraro at cdiazferraro@ifc.org.