Private capital has been flooding into international projects, dwarfing the contributions of the International Monetary Fund and the World Bank, according to a new study by a group representing banks, mutual funds and major investors. The report, prepared by the Institute for International Finance, Inc., has led some to question the need to continue operations of the two government agencies.

• Private capital flowing to 31 developing countries will reach a record $225 billion this year -- 16 times the roughly $14 billion expected to come from government agencies.

• While private investment in developing nations may slow somewhat next year -- to an anticipated $207.7 billion -- over the long term it will continue to grow.

• The IMF and World Bank were established at the close of World War II with the original goal of helping Europe rebuild, only changing its focus to developing countries in the late 1960s.

• Critics contend that abolishing or reducing the roles of the two public institutions would push rulers in poorer nations, hungry for investment capital, toward solid free-market policies which would benefit their economies.

Many observers cite the examples of countries like Singapore and Hong Kong, which have flourished by making their markets more attractive to foreign capital -- largely without the advice or economic aid of the two world agencies. On the other hand countries like Ethiopia, Madagascar and Venezuela -- after receiving billions in loans and aid over the years -- have yet to emerge from poverty.

The World Bank's internal review of its performance shows an embarrassing track record.

• Only two-thirds of about 250 World Bank projects were rated as "satisfactory" in 1994.

• The successes were mostly in countries where market-based reforms were made.

Source: Laura M. Litan, "Do We Still Need a World Bank?" Investor's Business Daily, October 3, 1996.