A New Era at the Inter-American Development Bank: Six Recommendations for the New President

Abstract

How should the Inter-American Development Bank (IDB) respond to the challenges of the new century? As recently as the early 1990s, governments and policymakers in Latin America and the Caribbean relied on the IDB and other multilateral institutions not only as important sources of finance but also for ideas and technical assistance in designing economic policies. Partly as a result of this advice, many countries implemented wide-ranging market-oriented reforms to accelerate their integration into the world economy. But the perception grew that the agenda advised by Washington and the multilaterals did not represent the interests of the region. The failure of the reforms to fully satisfy expectations for more rapid growth and poverty reduction heightened tensions. Meanwhile, countries developed stronger local economic expertise, vastly improving the quality of the domestic policy debate.As a result, the market for the IDB’s services has changed dramatically. Rapid growth in private capital flows has made its financial resources less important than in the past. And political leaders are increasingly articulating their own vision on how to bring about inclusive growth in Latin America and the Caribbean, thereby reducing their need for advice from Washington. Yet the region is struggling with complex economic challenges that cannot adequately be addressed by individual nations or regional groupings, such as the Organization of American States. And there is no shortage of problems to be solved. The IDB’s mission of promoting inclusive growth is closely aligned with the region’s most pressing needs.The selection of a new president to lead the IDB presents an opportunity for the institution to reassess its role and reshape its products and services to better address current challenges. In response to this opportunity, the Latin American Shadow Financial Regulatory Committee (CLAAF) and the Center for Global Development prepared this report for Luis Alberto Moreno, the new president of the IDB. This Report lays out key challenges facing the institution, explains how the Bank is uniquely poised to address them, and offers six recommendations for the new president to consider as he launches what can and should be a new era at the IDB.