Skip to content
[X]

Encyclopedia

Renata Venero

What is the Inter-American Development Bank (IDB)?

- In the Latin America and Caribbean region, one of the key institutions in the cooperation process has undoubtedly been the Inter-American Development Bank.

What is the Inter-American Development Bank (IDB)?

In a context of adjustment and great changes in the international scenario, cooperation played a relevant role in solving mutual problems of an economic, social, cultural and humanitarian nature. In the fifties the term development cooperation would find great support from economists, academics and governments that would put the idea into practice.

Thus, since the end of the Second World War, an institutional system began to take shape, outlined during the 1950s and which would be definitively consolidated in the 1960s, capable of managing the flows of resources that, from that moment on, , were going to be transferred by those countries called «industrialized countries» to «developing countries» (Koldo, 2000, p.28).

During this period, institutions such as the World Bank and the Regional Development Banks were created. The latter have been the most significant for development cooperation, since their structure and objectives are oriented to the needs of each region to which they belong. For this reason, the objective of this article is to address the origin, structure, and information related to the Inter-American Development Bank (IDB).

In the Latin American and Caribbean region, one of the key institutions in the cooperation process has undoubtedly been the Inter-American Development Bank. Which is an international financial organization created within the Organization of American States (OAS) in 1959 in order to promote economic and social growth in the region (Afi, 2016, p.1).

This institution is independent of the International Monetary Fund and the World Bank. In the same way, it is framed in the category of a particular entity, called "Development Bank", which has the capacity to intervene and directly influence the Regional Financial Architecture and the internal architecture of the States (Castiglioni, 2021, p. 112).

Therefore, as Lucas Castiglioni (2021) mentions, regional financial institutions such as the IDB assume an important role in the articulation of economic policies and in the "public-private investment" scheme. Likewise, they have the capacity to operate simultaneously in the governmental and financial spheres (p.112).

Based on the above, the relevance that this institution has today originated from the great work of all the representatives, presidents and diplomats of the time in the countries of America. Which, under the context of Pan-Americanism, sought to implement their ideas through institutions that supported them.

Mainly, the idea of creating an institution for development in the region arose from the proposals aimed at establishing an inter-American system during the Pan-American Conferences, from the First Conference in 1890, to the one held in Montevideo in 1933 (IDB, 2022).

The ideas that circulated in this regard, claimed that this future banking institute would essentially function as a "central bank" for the region, and that it would have monetary stability as its primary goal, and could even act as a regulator of a common currency for the continent ( Marichal, 2011, p.5).

Despite the continued interest in the creation of said institution on the part of delegates from Latin American and Caribbean countries, such as the delegate from Mexico, Eduardo Villaseñor, it took seventy years for the project to become a reality.

In 1958, the president of Brazil, Juscelino Kubitschek, served as a catalyst to carry out the proposal that had not been developed for so many years (Córdoba Catholic University, 2019, p.2). Under his initiative, the Pan-American Operation was carried out, which was a diplomatic mission in which he requested the support of the rest of the Latin American countries for the creation of a joint committee that would discuss the economic development objectives of the region, and evaluate the means to reach them (Marichal, 2011, p.25).

Thus, within the framework of the Organization of American States (OAS), with the Committee of 21 and its draft resolution on the establishment of an Institution for Economic Development, it was that on December 18, 1958, a meeting was convened. Specialized Commission of Government Representatives to negotiate and draft the constitution of the new inter-American financial institution (Marichal, 2011, p.26).

Consequently, the Specialized Commission concluded its activities on April 8, 1959 with the final document that was presented as the Constitutive Act of the new Inter-American Development Bank, which was signed by 18 founding countries: Argentina, Bolivia, Colombia, Costa Rica, Chile, Ecuador, El Salvador, the United States, Haiti, Honduras, Nicaragua, Panama, Paraguay, Peru, the Dominican Republic, Uruguay and Venezuela (Marichal, 2011, p.26).

It should be noted that the Inter-American Development Bank is, par excellence, the largest and oldest regional development institution in the world, as well as the first to have economic and social development policies and tools. At the same time, it is a pioneer in supporting social programs through the promotion of other economic, social, educational and health institutions. In short, over time, it became a model to be followed in other regions of the world (Córdoba Catholic University, 2019, p.2).

Over the years, the IDB has added new member countries as its capital has grown. These actions have allowed it to increase support for programs that help achieve the objectives of its constitutive act, as well as develop its actions in the private sphere.

In addition to the above, at the end of the 1980s, the IDB created new institutions and formulated policies to strengthen financing for the private sector of the borrowing member countries, giving rise to the formation of the IDB Group (Castiglioni, 2021, p.11 ). Which is composed of:

  • IDB Invest: The Inter-American Investment Corporation that supports SMEs.
  • IDB Lab: The innovation laboratory evaluates new high-risk models, in order to inspire the private sector (micro and small businesses) and solve economic problems related to development in Latin America and the Caribbean.

Additionally, the organizational structure of the IDB is made up of a General Assembly, which has the task of governing the institution and designating the President of the Bank. Each member country provides a Governor to the Assembly, in general, they are usually the Ministers of Finance or Treasury, the presidents of the central banks and other senior Public Officials (Universidad Católica de Córdoba, 2019, p.2).

The Assembly holds an annual meeting, in late March or early April, together with the Inter-American Investment Corporation. These events are forums to discuss issues of special relevance. In turn, there is an exchange of ideas and opinions between the representatives of both institutions (IDB, 2022).

In the same way, authorities from other multilateral institutions, representatives of development agencies, and executives from the private financial sector may attend the meeting of the Assembly (IDB, 201). The 2022 Annual Meeting was held virtually from March 28 to April 1 of this year.

On the other hand, the Assembly delegates responsibilities to the Executive Board, which is in charge of supervising and conducting the Bank's operations. It is made up of 14 Executive Directors and 14 alternates, the latter being fully empowered to act when their holders are absent (IDB, 2022).

Currently, its headquarters are in Washington, United States, and it has regional offices in Asia (Tokyo, Japan) and Europe (Madrid, Spain) (Colombian Foreign Ministry, 2022). The Bank's main objectives are:

reduce poverty and social disparities; meet the needs of small and vulnerable countries; help improve health, education and infrastructure; encourage development through the private sector; meeting the challenge of climate change by promoting renewable energy and ecological sustainability; as well as strengthen regional cooperation and integration. (IDB, 2022)

This is done by offering loans, donations, and technical assistance for specific projects and economic reform programs. Today, the IDB is the main source of financing for development in Latin America and the Caribbean (IDB, 2022)

In addition, it has 48 member countries divided into 14 voting groups, of which 26 are borrowing members, all of them from Latin America and the Caribbean, and 22 non-regional, non-borrowing members, including China (Afi, 2016, p.3). Borrowers receive just over 50% of the voting power on the institution's board of directors (IDB, 2022).

< /tr>< /tr>
Borrowing member countriesNon-borrowing regional countries Non-borrowing non-regional countries
ArgentinaCanadaGermany
BahamasUnited StatesAustria
BarbadosBelgium
BelizeChina
BoliviaKorea
BrazilCroatia
ChileDenmark
ColombiaSlovenia
Costa RicaSpain
EcuadorFinland
El SalvadorFrance
GuatemalaIsrael
Guyana Italy
HaitiJapan
Honduras< /td>Norway
JamaicaNetherlands
MexicoPortugal
NicaraguaUnited Kingdom
PanamaSweden
ParaguaySwitzerland
Peru
Dominican Republic
Suriname
Trinidad and Tobago
Uruguay
Venezuela

Own preparation with data from the Inter-American Development Bank website. Source: IDB (2022). Share capital and voting power.

Since its Ninth General Capital Increase (IDB-9), the IDB has sought to dedicate at least 35% of the volume of all its annual loans to small and vulnerable countries in the region. This group of countries includes the Bahamas, Barbados, Belize, Bolivia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, Panama, Paraguay, Suriname, Trinidad and Tobago, and Uruguay. (IDB, 2022).

On the other hand, according to the Project Statistics of the official website of the Inter-American Development Bank, in the last 5 years a total of 503 projects have been approved, with financing of 64541.10 million dollars. During this period, Brazil is positioned as the country with the largest projects financed by the IDB, with a total of 58 (IDB, 2022).

In the same way, it is estimated that annually, the IDB grants 13 billion dollars in approved credits to its borrowing countries. In 2021, the main sectoral areas to which this aid was allocated were the reform or modernization of the State, social investment, financial markets, transportation, water and sanitation, energy, and health (IDB, 2022). In turn, since 2020 it has provided financing to borrowing countries for their recovery due to the ravages caused by the COVID-19 pandemic in the region.

In conclusion, it can be observed that the concept of the Inter-American Development Bank was born from the impulses for a Pan-American project, reinforced by the ideas of International cooperation, in the 50s with the objectives of Cooperation for Development and that is currently positioned as one of the most important Regional Banks in the world.

Quoting Lucas Castiglioni (2021), the Bank was created to counteract the marginalization within the International Monetary Fund and the World Bank, to emphasize a voice different from the established one and, at the same time, it was the fruit of the joint struggle of the countries Latin American and Caribbean countries to find their way into the postwar world order, from which they had been totally excluded.

Sources

    Afi. (2016). Banco Interamericano de Desarrollo. AfiGuías. 16. 8. http://www.iberglobal.com/files/2016/bid_afi.pdf

    BID. (2022). Acerca del BID. Sitio web del Banco Interamericano de Desarrollo. https://www.iadb.org/es/acerca-del-bid/perspectiva-general

    BID. (2022). Capital social y poder de voto. Sitio web del Banco Interamericano de Desarrollo. https://www.iadb.org/es/acerca-del-bid/capital-social-y-poder-de-voto-0

    BID. (2022). Cómo estamos organizados. Sitio web del Banco Interamericano de Desarrollo. https://www.iadb.org/es/acerca-del-bid/como-estamos-organizados

    BID. (2022). Estadísticas de Proyectos. Sitio web del Banco Interamericano de Desarrollo. https://www.iadb.org/es/proyectos

    BID. (2022). Historia del Banco Interamericano de Desarrollo. Sitio web del Banco Interamericano de Desarrollo. https://www.iadb.org/es/acerca-del-bid/historia-del-banco-interamericano-de-desarrollo%2C5999.html

    BID. (2022). Países miembros prestatarios. Sitio web del Banco Interamericano de Desarrollo. https://www.iadb.org/es/acerca-del-bid/paises-miembros-prestatarios

    BID. (2021). Reuniones Anuales. Sitio web del Banco Interamericano de Desarrollo. https://www.iadb.org/es/acerca-del-bid/reuniones-anuales

    Cancillería de Colombia. (2022). Banco Interamericano de Desarrollo (BID). Sitio web del Ministerio de Relaciones Exteriores de Colombia. https://www.cancilleria.gov.co/international/regional/idb

    Castiglioni, Lucas. (2021). Apuntes para una historia crítica del Banco Interamericano de Desarrollo (BID). Revista Cuadernos de Economía Crítica. 17(14). http://sociedadeconomiacritica.org/ojs/index.php/cec/article/view/230

    Koldo Unceta, Pilar Yoldi. (2000). La cooperación al desarrollo: surgimiento y evolución histórica. 1ª ed. Victoria-Gasteiz: Servicio Central de Publicación del Gobierno Vasco. 123.

    Marichal, Carlos. (2011). Los antecedentes históricos de la creación del Banco Interamericano de desarrollo: reflexión a partir del archivo de Eduardo Villaseñor.

    Archivo Histórico del Banco de México. (s.f.) 53. https://carlosmarichal.colmex.mx/banca/Antecedentes%20historico%20BID%20y%20E%20Villasenor.pdf

    Universidad Católica de Córdoba. (2019). Banco Interamericano de Desarrollo. Blog de la Universidad Católica de Córdoba. 9. https://blog.ucc.edu.ar/siv/files/2019/12/BANCO-INTERAMERICANO-DE-DESARROLLO-1.pdf


The best content in your inbox

Join our newsletter with the best of CEMERI

Related articles

Venero, Renata. “¿Qué es el Banco Interamericano de Desarrollo (BID)?.” CEMERI, 13 sept. 2022, https://cemeri.org/en/enciclopedia/e-banco-interamericano-de-desarrollo-fv.