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Power structures and regional development banks

Published online by Cambridge University Press:  22 May 2009

Stephen D. Krasner
Stephen D. Krasner
Affiliation:
Associate Professor of Political Science at The University of California, Los Angeles.
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Abstract

This paper examines the experience of developing countries in the three major regional financial institutions, the Inter-American, Asian, and African Development Banks. In the Inter-American Development Bank, members from developing countries have secured both influence and resources; in the Asian Development Bank they have secured resources but little influence; in the African Development Bank they have influence but limited resources. This variation can be explained by the different issue area power structures within which the banks function. The Inter-American Development Bank has functioned within a hegemonic structure. The dominant power, the United States, pursued long-term political objectives and accepted considerable autonomy for developing countries within the Bank. The Asian Development Bank has functioned within a bipolar structure with Japan playing an increasingly important role. As a normal power, Japan has pursued tangible economic interests and has constrained the behavior of the Asian Development Bank. Until the late 1970s the African Development Bank functioned in a multipolar structure that largely excluded nonregional countries. This exclusion made it impossible to generate substantial resources. Experience in the regional development banks suggests that a hegemonic structure can offer weaker states both resources and influence provided that the milieu goals of the dominant power are not violated.

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Articles
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International Organization , Volume 35 , Issue 2 , Spring 1981 , pp. 303 - 328
Copyright
Copyright © The IO Foundation 1981

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References

1 Figures derived from OECD, DAC, Annual Report (Paris: OECD, 1979)Google Scholar, Tables A. 1 and C. 3.

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5 For an excellent discussion of the relationship between ideology and foreign aid doctrines see Packenham, Robert, Liberal America and the Third World (Princeton: Princeton University Press, 1973)Google Scholar. The seminal discussion of liberal absolutism is Hartz, Louis, The Liberal Tradition in America (New York: Harcourt, Brace, 1955)Google Scholar.

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8 The purpose of callable capital is to provide a guarantee for bonds issued by multilateral development banks (MDBs). Unless an MDB cannot amortize its bonds from paid-in capital and repayments on loans, callable capital is never transferred to the bank by the pledging country. No MDB has ever failed to fulfill its obligations.

9 Information and figures from U. S., Congress, House, Subcommittee on International Development Institutions and Finance, Committee on Banking, Currency, and Housing, Hearings on HR 8905, To Provide for Increased Participation by the United States in the Inter American Development Bank, 94th Cong., Ist sess., 1975, pp. 285–86; IDB, Annual Report, 1977, pp. 25–28Google Scholar.

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13 Figures for absolute flows show much higher correlations because of size: bigger countries have more projects, get more aid, and engage in more trade.

14 Percentages derived from information in IDB and IBRD annual reports.

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20 The following calculations do not include contributions to some small soft loan windows whose funds do not exceed $:50 million. Calculations do not include ADB replenishments agreed to but not committed by the beginning of 1980.

21 White, , Regional Development Banks, pp. 69 ff.Google Scholar; House Committee on Foreign Affairs, United States and Multilateral Development Banks, p. 25. Figures for percentage of sectoral lending from Inter American and Asian Development Banks, Annual Reports, various years.

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23 In the long term it is possible to argue for a coincidence between specific American interests and stifling the spread of communism. But the kind of connection that American policymakers made between these two goals involved many steps, some of them based on wishful thinking or ideological blindness rather than careful analysis or clear empirical evidence. Economic assistance was thought to promote economic development, economic development political stability, political stability democracy, democracy anticommunism, anticommunism friendly relations with the United States. Such long threads of reasoning are not typical of foreign policymaking, because the environment is so uncertain. Policies are more likely to be successful when they involve one or two steps, not four or five. Moreover, American policymakers did not calculate costs very carefully so long as they believed that a particular policy would promote their long-term political goals. Until the late 1970s U.S. leaders showed little concern with harboring or developing American resources. Policies pursued in the name of anticommunism, especially Vietnam, damaged specific American economic interests.

24 Krasner, Stephen D., Defending the National Interest: Raw Materials Investment and U.S. Foreign Policy (Princeton: Princeton University Press, 1978), chapter 9Google Scholar. See Keohane, , “Hegemonic Leadership,” for an explication of the American shift to hegemonic leadership in the late 1940sGoogle Scholar.

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26 Ibid., p. 106; AFDB, Annual Report, 1979, pp. 62–63, 65Google Scholar; U.S. National Advisory Council on International Monetary and Financial Policies, Special Report on Membership in the African Development Bank, mimeo, 03 1980, pp. 5–6Google Scholar.

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