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ABSTRACT
This paper looks at the role, evolution, and regional coverage of the system of multilateral and national development banks (MDBs and NDBs). It analyzes the roles that development banks should play to correct the market failures that characterize financial systems, particularly in emerging and developing countries. It concludes that MDBs should be capitalized to better support emerging and developing countries’ recovery after the COVID-19 crisis. They should also be aligned with the Sustainable Development Goals, and enhance their role in promoting innovation and structural transformation, and supporting climate change mitigation and adaptation. It underscores that the development banks should work as a system and that better networking between MDBs and NDBs is essential and should be systematically monitored. Finally, it points out that MDBs should support the development of strong NDBs in the regions where these institutions are underrepresented.
Disclosure Statement
No potential conflict of interest was reported by the author(s).
Notes
1 We prefer this term to the more broadly used of global financial crisis because, although it had global effects, it concentrated in the United States and Western Europe.
2 We have added the second and third functions mentioned to the original list proposed by Griffith-Jones and Ocampo (Citation2018).
3 This institution was created during the communist era. After a prolonged crisis, it has been restructured
4 This group includes the UK, which is now in the process of withdrawing from the EU, but we would keep it as part of the EU-15.
5 As indicated by the International Chamber of Commerce, 55% were utilizing trade facilitation programs implemented by MDBs by the summer of 2009 (ICC Citation2009).
6 See the websites of the three institutions: https://www.thegef.org/, https://www.greenclimate.fund/ and https://www.climateinvestmentfunds.org/.
7 The first report surveyed 90, and the second one 64 institutions.
8 The analysis in this and the following paragraphs is based with interviews with current and former World Bank officials working with NDBs: José de Luna Martinez, Eva Gutiérrez and Ana María Avila.