New Global Economic Architecture
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New Global Economic Architecture

The Asian Perspective

Edited by Masahiro Kawai, Peter J. Morgan and Pradumna B. Rana

The global financial crisis of 2007-2009 exposed flaws and shortcomings in the global economic architecture, and has sparked an international debate about possible remedies for them. The postwar global architecture was essentially guided by the major developed economies, and was centered around the IMF, the GATT – the predecessor of the WTO – and the World Bank. Today, however, the balance of economic and financial power is shifting toward the emerging economies, especially those in Asia, and both global governance and economic policy thinking are beginning to reflect this shift. This book addresses the important question of how a regional architecture, particularly one in Asia, can induce a supply of regional public goods that can complement and strengthen the global public goods supplied through the global architecture. These public goods include institutions to help maintain financial stability, support more open trading regimes and promote sustainable economic development.
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Chapter 10: World Bank, Inter-American Development Bank, and subregional development banks in Latin America: dynamics of a system of multilateral development banks

Fernando Prada


This chapter is a summary of the working hypothesis and main conclusions of an ongoing research program at FORO Nacional Internacional. The main objective of the program is to identify long-term trends and dynamics of the system of international development finance (Bezanson et al. 2005). Among the actors that participate in this system, the multilateral development banks (MDBs) are an innovative institutional model to channel finance and knowledge to developing countries. They are international financial intermediaries whose shareholders include both borrowing developing countries and non-borrowing donor countries. MDBs have three functions: (i) to mobilize resources from private capital markets and from official sources to make loans to developing countries on better-than market terms; (ii) to generate knowledge on and provide technical assistance and advice for economic and social development; and (iii) to furnish a range of complementary services, such as international public goods, to developing countries and to the international development community (Sagasti with the contribution of Prada 2002; Sagasti and Bezanson 2000). MDBs operating in the Latin America and Caribbean (LAC) region have formed a dense network of institutions, where competition and complementation have been the main drivers of their evolution during the last 50 years. In a previous document (Sagasti and Prada 2006), we argued that the LAC region has great potential for decentralization compared to other regions because of the strength of its regional and subregional institutions.

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