Comparative advantages and challenges of regionaldevelopment banks: the CAF experience

The purpose of this policy brief is to analyze the role and the relevance of multilateral development banks, especially the regional development banks. To this end, we first emphasize those factors that justify the existence of such banks and assess the role they have played since their inception. Taking into consideration the lessons derived from past experience, the current favorable economic climate in Latin America, and the existence of new funding mechanisms unavailable in the past, we also identify the main challenges that face regional banks, beginning with the lag in key economic indicators, such as insufficient growth, low savings, investment and productivity rates, as well as the high levels of inequality and social exclusion; all of which inhibit achieving a more stable, sustainable and higher quality pattern of development. In this context, beyond the question of allocation of financial resources, it is imperative to redefine the purposes and objectives of development banks in Latin America. This entails implementing more effective measures related to knowledge transfer and technical support, as well as applying innovative catalytic instruments to generate more economic and social value.