Regional Development Financing

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.