The Role of Multilateral Lending Institutions in the Development Process

The 1980s are a turning point for the multilateral lending institutions. The progress and differentiation of developing countries, international debt difficulties, and the unwillingness or inability of the United States to provide its historic leadership for these institutions have raised a series of important questions about their future role in the international economy. Their future contribution to the growth of developing countries will depend, in large part, on achieving a consensus as to their role in an altered international economic environment and then gaining adequate political support for them to carry out that role.Achieving an intellectual understanding of the issues raised in an altered environment will be an important step in resolving those questions and reaching a consensus. As a contribution toward that understanding, this article addresses that topic. It starts with an evaluation of the analytical underpinnings of the formation and early activities of the multilateral lending institutions and then briefly considers their evolution and contributions to the international economy in the years prior to the 1980s. Thereafter, it notes the changes in the international economy and in our understanding of the development process. Next, it addresses the issues that must be resolved for a clear mandate for multilateral lending institutions. Finally, the article considers issues pertaining to the division of functions between the global institutions, on the one hand, and between the World Bank and the regional development banks, on the other.