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3 - Origins, Politics, and Structure of Regional Development Banks

Published online by Cambridge University Press:  05 September 2016

Ruth Ben-Artzi
Affiliation:
Providence College, Rhode Island
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Summary

Neither a borrower, nor a lender be;

For loan oft loses both itself and friend,

And borrowing dulls the edge of husbandry.

– Hamlet, I, iii, 75

Have RDBs evolved in a changing global environment? What were the reasons for their creation – political, economic, and social – and are they still relevant? The twentieth-century motivations for creating international institutions such as the UN (WWII), the Bretton Woods Institutions (the Great Depression and WWII), and NATO and the RDBs (the Cold War) have given way to an increasingly globalized world economy. IFIs share credit for these global changes, but it also means that they might have to reinvent themselves so that their contributions remain effective.

This chapter traces the historical developments of the RDBs. An examination of the development banks’ origins, their evolution as institutions, and their structural components is a valuable basis for discerning the lending policies of the RDBs over the years in order to determine whether they are motivated by political, economic (banking-centered goals), or social factors (developmental goals).

The reasons (both declared and implicit) for the RDBs’ creation shed light on their development as institutions and the political relationships between the member states. Understanding the RDBs’ institutional design – including membership, decision-making and voting, the assignment of veto power, staff, Articles of Agreement, budget, and credit ratings – is essential for evaluating the banks’ activities. Both the political environment that paved the way for the establishment of the RDBs and the institutional model upon which they were created, constitute the foundation for political developments within the institutions and between them and their members. Moreover, global political and economic developments, often informed by evolving norms and ideas, help shape states’ attitudes toward multilateral institutions, and enable some of these institutions to outlive the political reasons that contributed to their creation. In sum, by presenting an overview of the RDBs’ history and the interests – internal and external – that shape their institutional design, this chapter sheds light on the controversy surrounding their role as creditors.

Type
Chapter
Information
Regional Development Banks in Comparison
Banking Strategies versus Development Goals
, pp. 63 - 108
Publisher: Cambridge University Press
Print publication year: 2016

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