Edited by B. Mak Arvin and Byron Lew
Chapter 16: Informal influence on multilateral lending: the case of the Inter-American Development Bank
In the aftermath of World War II, the World Bank was created to support post-war reconstruction. As the focus of the World Bank shifted to promoting economic development in low-and medium-income countries, regional development banks were founded to pursue similar goals. The Inter-American Development Bank (IDB) opened its doors in 1959, followed by the African Development Bank and Asian Development Bank (ADB) in 1964 and 1965, respectively. Although promoting economic growth and decreasing poverty are the stated goals of multilateral development banks (MDBs), the actions of these organizations do not solely reflect these goals; the interests of powerful member states sometimes intrude. Research on the governance and lending practices of the World Bank and the ADB has revealed how donors influence the process of project selection and implementation and thus compromise the autonomy of these institutions. Although it has been subjected to less public and academic scrutiny, the IDB presents an interesting case because of both its structural similarities and differences vis-a-vis the World Bank and the ADB. Because the regional development banks were modeled on the World Bank, the IDB, the ADB and the World Bank share the same basic voting system and financial structure. In addition, each has both a hard window (lending near market rates) and a soft window (with lending far below market rates). Finally, the IDB and the World Bank are located just blocks apart, a stone’s throw from the White House in Washington, DC.
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