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Conceptualizing RFI’s versus GFI’s - Ravi Kanbur
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5. Conclusion
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The broad arguments developed above clearly need to be fleshed out further.
However, they already point to five specific policy conclusions on the division of labor
between RFI’s and GFI’s, and on what both types of institutions should be doing to
improve their effectiveness.
First, the responsibility and resources for region specific public goods should be
increasingly shifted to the RFI’s. To the extent that the RFI’s do not have the capacity to
deliver on these just yet, a purposive program of building up these capacities should be
developed, using the resources currently at the World Bank. The specific case of the
AfDB comes to mind. In the long run, financing of multicountry projects within Africa
should devolve to the AfDB from the World Bank. Clearly, the AfDB does not at the
moment have the capacity to do this. Donors should divert resources to the AfDB to help
it build up this capacity, while continuing to use the World Bank’s current capacity for
the next decade, say. The World Bank could provide global syntheses of experiences
across regions, but this would be a limited role.
Second, truly global issues such as green house gases, financial contagion, global
spread of diseases, etc should stay the purview of global institutions. Indeed, the GFI’s capacity to address and to finance responses to these issues should be strengthened, in
partnership with other relevant global agencies such as the World Health Organization for
health or the United Nations Environment Programme for green house gases.
Third, on country specific operations there should be a presumption in favor of
donor resources flowing through RFI’s rather than the World Bank. This does not
necessarily mean the end of the country operations of the World Bank. Certainly in the
short to medium term (extending for a decade or more) the RFI’s will need to build up
capacity to take on this greater role. However, even in the long run there would be a
significant financing role for the World Bank if it represented a view on development
strategies that was clearly defined and differentiated from the RFI’s, presumably because
of the global nature of the World Bank as an institution.
Fourth, there should be a presumption that the lead role in interacting with a
government in developing and monitoring conditionality should fall to the RFI’s rather
than the IFI’s. The logic of the argument applies both to the World Bank and to the IMF,
although in this paper it is intended primarily to a division of labor between the World
Bank and the RDB’s. Again, this does not mean that there is no role for the World Bank.
In the long run, there could be an important role as a trusted and independent entity from
outside the region, capable of transcending interregional rivalries and tensions. But in
order for this role to be possible, the governance structure of the Bank will have to be
changed to make it more independent of G 7 interests.
Fifth, the RFI’s should apply the same tests to themselves vis-a vis sub-regional
financial institutions (SRFI’s), to ask which roles and responsibilities are best devolved to
them, and whether the instruments they have are the best for the tasks at hand.
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