The Business of Development: The Impact of Financial Imperatives on the Activities of Multilateral Development Banks
Abstract
In academic literature as well as general public perception, the World Bank and other multilateral development banks (MDBs) have long been viewed as domineering organizations able to impose themselves upon developing countries. Since the mid-1990s, however, a number of emerging market governments have found themselves in strong financial positions. Economies such as China, India, Indonesia, Brazil, Mexico and Peru—which together accounted for nearly half (44%) of the World Bank's loan portfolio in 2009—now have well-managed fiscal accounts, low public debt levels, high international reserves, and well-established access to international capital markets.
Little attention has been paid in academic literature to how this might impact the behavior of MDBs. Considering that MDBs are designed to self-finance their operations mainly from the proceeds of their loans, this would seem to be a fundamental question. Is borrowing from MDBs on the decline, and if so, are some MDBs facing a more serious drop in lending than others? How is this impacting their financial sustainability? Is this changing the way they behave toward borrowing countries, including spurring competition between MDBs and with private sources of sovereign finance? More broadly, how do financial considerations impact the activities of different MDBs?
This research attempts to address these questions by comparing three different MDBs—the World Bank, the Inter-American Development Bank (IADB), and the Andean Development Corporation (Corporación Andina de Fomento—CAF). I hypothesize that that the behavior of each MDB can be explained in good part as a function of the type of shareholding arrangement in each MDB. The three types of MDB shareholder arrangements considered are: domination by wealthy non-borrowing countries (the World Bank); stronger but still subordinate influence of borrowing countries (the IADB); and complete control by borrowing countries (at the CAF). The operational characteristics of each MDB derived from these shareholder arrangements, I suggest, strongly condition the pattern of their development activities in different economic circumstances.
Supervisor
Research areas
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Multilateral development banks/international organizations
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World Bank
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Inter-American Development Bank
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Andean Development Corporation (Corporación Andina de Fomento)
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International political economy
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Latin America political economy
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Economics and development impacts of illegal drug trade
CV/Resume
Publications
Humphrey, C. and K. Michaelowa. 2010. "The Business of Development: Trends in Lending by Multilateral Development Banks to Latin America, 1980-2009", Center for Comparative and International Studies Working Paper 65, University of Zürich/ETH.
Fretes-Cibils, V., R. Polastri and C. Humphrey. 2007. "The Power of Growth to Build a Prosperous Society", pp. 43-63 in The Opportunity for a Different Peru, M. Giugale, V. Fretes-Cibils and J. Newman, eds., Washington DC: World Bank.
Humphrey. C. 2003. "Narcotics, Economics and Poverty in the Southern States," Policy Note 17 in the Mexico Southern States Development Strategy, Washington DC: World Bank.
Languages
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English (native speaker)
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Spanish (3S, 3W)
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Portuguese (1S, 1W)
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German (1S, 1W)
1 = basic; 2 = intermediate; 3 = fluent
Contact information
Chris Humphrey
Guest Lecturer
University of Zürich
Department of Political Science, Chair of Political Economy
Affolternstrasse 65
H326
8050 Zürich
Switzerland
Tel. +41 44 634 5856
Email: c.s.humphrey@lse.ac.uk|