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Regional Development Financing

Published online by Cambridge University Press:  22 May 2009

Henry Simon Bloch
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Regional development banks can serve as focal points for regional and subregional cooperation, thus promoting economic integration. They are institutions whose objectives are neither national nor global and whose leadership and staffs have a regional outlook.

The first and immediate challenge confronting these regional development banks is the financing of regional projects which are beyond the reach of national development banks. The International Bank for Reconstruction and Development (IBRD) has devoted only limited resources to such project, with a few spectacular exceptions, especially the Indus River project. A purely national approach to planning and financing development does not make sense in most of Latin America and Africa because many nations on these continents are “minicountries,” too small to form economic units of development. Many national borders have been determined by political and diplomatic history rather than by economic factors; frequently, they cut across natural development units such as river basins or mineral deposits. Moreover, except in Europe, the very dearth of strong national institutions makes regional development banks important; they provide additional financial intermediaries to be interposed between the developing regions and the world financial centers, as well as between various national financial institutions of the member countries of the regions concerned.

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Articles
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International Organization , Volume 22 , Issue 1 , Winter 1968 , pp. 182 - 203
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Copyright © The IO Foundation 1968

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References

1 The tenth Gabriel Silver Lecture at Columbia University, under the auspices of the School of International Affairs, on April 13, 1967.

2 A very significant analysis of the Bank's new policy was presented to the Canadian Political Science Association by Irving S. Friedman, the Economic Adviser to the President, on June 7, 1967. In December 1967, at the annual review of development financing activities by OECD, the Common Market countries criticized IDA for directing insufficient funds toward Africa.

3 A full treatment of the European Investment Bank and the European Coal and Steel Community (ECSC) will be available in a forthcoming book by Henry Simon Bloch and William Bruce Bassett as part of the above-mentioned project.

4 Transportation, 8.6 percent; electric power, 8.2 percent. (Inter-American Development Bank, Seventh Annual Report: 1966 [Washington, 1967], p. 5Google Scholar.)

5 The Columbia University School of International Affairs is sponsoring study on European financial integration by E. S. Kirschen, edited by Henry S. Bloch and William Bruce Bassett.

6 On CIAP See Raúl Sáez, “The Nine Wise Men and the Alliance for Progress,” elsewhere in this volume.

7 See the various studies by the Committee for Coordination of Investigations of the Lower Mekong Basin, the so-called Mekong Committee. See also Schaaf, C. Hart and Fifield, Russell H., The Lower Mekong: Challenge to Cooperation in Southeast Asia (Princeton, N.J.: D. Van Nostrand Company, Inc., 1963)Google Scholar.

8 Botswana and Lesotho at the time of writing have not yet decided for or against membership.

9 Many of which are embodied in the Text Concerning the Loan and Investment Policy of the African Development Bank and Its Procedures, approved by the Executive Directors in December 1965 laying the foundation for the Bank's operations.

10 All members must pay in a portion of their capital subscriptions. In 1967 the first member of the British Commonwealth, Trinidad and Tobago, met the prerequisite of becoming a member of the Organization of American States (OAS) and joined IDB. This comes as a result of a major OAS concession: permission for members to receive trade preferences from outside the region.

11 Total capital subscriptions were double the callable amount for the United States and Japan.

12 See “Regional Development Financing,” by Bloch, Henry S., in cooperation with the Fiscal and Financial Branch of the Department of Economic and Social Affairs, United Nations Conference on Trade and Development, 02 9, 1966Google Scholar. (UN Document TD/B/AC.4/R.3); and Bloch, Henry S., Le Financement Régional et le Développement de l'Amérique Latine (No. 315) (Brussels: Société Royale d'Economie Politique de Belgique, 03 1966)Google Scholar.

13 For details see Press Release 67/10, March 6, 1967, of the International Bank for Reconstruction and Development.

14 The Social Progress Trust Fund is almost totally depleted, and in large part its activities are being assumed by the Fund for Special Operations.

15 Creation of a multimillion-dollar agricultural fund under the management of the Asian Development Bank was approved by the second ministerial conference on Asian economic development, held in Manila on April 27–29, 1967.

16 On the Horowitz Plan see the essay by Roy Blough in this volume. See also UNCTAD and IBRD documentation on the subject.

17 See Bloch, Regional Development Financing, and Bloch, Le Financement Régional et le Développement de l'Amérique Latine.