The Subregional Development Banks and the Expansion of Socio-Economic Growth in Latin America: Current Issues and Future Prospects

• Author: Francesco Seatzu
• Pages: 270-316

The Subregional Development Banks and The Expansion of Socio-Economic Growth In Latin America: Current Issues and Future Prospects

The Subregional Development Banks And The Expansion Of Socio-Economic

Growth In Latin America: Current Issues And Future Prospects

Francesco Seatzu1¨

ABSTRACT

Sub-regional multilateral organizations are playing a rapidly increasing role in the

 

Latin American (‘LAC’) region. Evidence is also to be found in the following two

circumstances. Firstly, like reserve pooling institutions sub-regional multilateral

organizations in general and international sub-regional banks in particular are

          

       

development organizations are helping the LAC countries to increase their role

         

strengthening their internal capital markets. For instance, they are improving their

funding conditions and issuing bonds in Latin American currencies. Jointly with

      



liquidity. Therefore, for these and other reasons, the wealthier countries of the

LAC region such as Brazil and Mexico have allocated and still continue to allocate

increased resources to these organizations, and have also in several circumstances

taken their views into consideration in their own action plans and programmes.

However, though surprising, the wide and fast-growing role of sub-regional

          

very little attention from an international legal perspective. The overall goal of this

  

     

Starting from the premise that this experience has been one of the most successful

in the developing world (though uneven in terms of country coverage and services

provided), the paper will show that the Andean sub-region has been particularly

         

         



matters. In doing so, the paper will stress in particular that the two most successful

    

(CAF) and the Central American Bank for Economic Integration (CABEI) have

shown the capacity to supply services to member countries in a timely way, with

counter-cyclical effects and on a wider scale relative to other types of multilateral



    

healthy portfolios, even in the face of default by member countries. This is so even

1 *PhD (Not); Chair in International and EU Law, University of Cagliari, Italy.

IX ANUÁRIO DE DIREITO INTERNACIONAL

though the services of these institutions could be broadened to support also the

growth and integration of the physical infrastructure and macro-economic policy

coordination. Concerning its overall structure, this paper is divided into two main

  

international legal perspective, the relative position of international sub-regional

 

          

assistance and knowledge to countries of this region. In the second part, through

a consideration of the structure and functioning of the CABEI and CAF the paper

will elaborate recommendations and draw some conclusions about the international

       

the LAC region, and how they can better enhance sub-regional cooperation and

promote collective action.

Keywords: 



development institutions.

1. Introductory Remarks.

The starting point of the following analysis is the idea that sub-regional



 

view of these uses and functions is hindered by two essential ingredients of the

environment in which such institutions currently operate. First, the growing

interdependence of the sovereign states belonging to the same geographical region

naturally leads to international cooperation and multilateralism in the running

            

intrinsically positive thing.2 International sub-regional institutions are, as it were,

landmarks on the path to an innovation-driven economy, and not only in Latin

America.3           

         

well as to generate knowledge on and supply technical advice and assistance for

2 Amplius G. P. Sampson, ‘Introduction’, in G. P. Sampson, S. Woolcock (eds.), Regionalism,

Multilateralism, and Economic Integration: The Recent Experience, (Tokyo: United Nations University

Press, 2003), p. 3 ff.

3

            

    

    



scenarios and strategic choices



of Development: Asian Perspectives

The Subregional Development Banks and The Expansion of Socio-Economic Growth In Latin America: Current Issues and Future Prospects

economic and social growth. Again, this is also clear if one pays attention to the

      

private sector lenders because they are neutral to risk.4 Critical assessment of their

performance is therefore hindered by the necessity not to strike at the principle for

which they stand.

        

as ‘banks’, i.e. as entities capable of accomplishing certain duties in the exclusive

interests of their clients. They were not purported to take on the wider tasks and

duties that they have achieved, as instruments for general trends in the running

         

American system of sub-regional multilateral banks was not conceived as a

        

capable of performing what is currently perhaps its main duty, the conduct of

   

    

documented and recently much known weaknesses such as a proneness to fashion,

a proliferating bureaucracy, weak decision-taking capacity, and so on.5 Fully aware

of these and other weaknesses, but needing sub-regional multilateral institutions to

accomplish certain duties that it is no longer fashionable to accomplish via national



in setting up clear guidelines and general principles for the optimal distribution of



   

incomplete attention given to the nature of the duties to be achieved, and the

  

chapter is the political analysts’ overall tendency to equate the case for increased

          

increasing the resources of a particular set of multilateral development institutions,



6

This chapter mainly focuses on two sub-regional multilateral institutions

    

          

          

issues. The questions that this paper tackles, and aims to answer, are as follows.

What was the nature of the demand which lead to the creation of these alternative

          

4       Enhancing the role of regional development

banks, (New York: United Nations, 2008), p. 4 ff.

5

6 Further references can be found in F. Seatzu, ‘The Role of the Multilateral Investment fund (MIF)

in the Promotion of Foreign Private Investments in the Latin American and Caribbean Regions’, in A.

Tanzi, A. Asteriti (eds.), Foreign Investment Law in Latin America: Problems and Prospects



    International Studies/Etudes Internationales pp.,

301-316.