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Conceptualizing RFI’s versus GFI’s - Ravi Kanbur
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3. Country Specific Operations
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While addressing cross-country externalities involving poor countries is indeed a
legitimate claim on aid resources, and while the perspective developed here suggests a
sharp framework for examining the division of labor between the World Bank and the
RDB’s, in fact as is well known the vast proportion of the operations and the budget of
the Bank and the RDB’s are conventional country specific operations with little regard to
multi country dimensions. It is here that the overlap between the Bank and the RDB’s is
most apparent. A typical operation (project or program) in Africa will have involved in it
both the Bank and the African Development Bank (plus the EU and a host of bilaterals,
of course). The same is true of operations in Asia, Latin America and in Eastern Europe.
What can possibly be the rationale for such overlap between the Bank and the RDB’s?
Recall that we are focusing on country specific operations, to which each donor
agency brings financial resources and, hopefully, technical expertise. The case of technical expertise illustrates some of the tensions present. Technical knowledge on
development has a local and a general dimension. Lessons learnt across a range of
projects in different circumstances can be synthesized to develop general principles and
guidelines. But then the translation of these general principles into specific action
requires local knowledge. The combination of the two is what produces the best outcome.
Clearly, if it were costless then the synthesis should be across as wide range of
experiences as possible. But the introduction of a cost factor might suggest a narrowing
of the scope to a small range of experiences. A natural route to narrowing is to focus on
experiences within the region. But whether one accepts this argument or not, it should be
clear is that it is wasteful for the World Bank to do regional syntheses and each of the
RDB’s to do a regional synthesis on a particular topic. But this is exactly what happens.
While there is at least an argument for a fully global perspective on knowledge
and experience, it is not clear how exactly it translates to financing, which is fungible.
Unless of course the argument is made that without financing projects each agency would
not have a seat at the table and would not therefore build up its experience. But this
seems a stretch. What we have at the moment is overlapping involvement of each RDB
and the World Bank in a large number of country specific operations in a region, with the
RDB and the World Bank then drawing on this experience to produce regional syntheses.
A clearer rationale for having both the World Bank and the RDB involved
financially in the same country operation is that each agency reflects, in some way,
different donor preferences. These are institutions comprising different groupings of countries, and therefore reflect some aggregation of these countries’ preferences on
different dimensions of the development agenda. For any given donor country, therefore,
its own preferences are perhaps best approximated by diversifying its resources between
a number of different agencies. This is, of course the benign view of the matter. There is
a less benign view that sees rich countries as using the multilateral financial institutions
as instruments of their foreign policy. Each RFI is then seen to be the vehicle for the
interests of particular rich countries that have historically dominated the landscape in
those regions, perhaps by virtue of a colonial legacy. But, as noted above, this line of
argument will not be pursued in this paper.
The “different preferences” view of multiple agency involvement in the same
project in the same country is in principle an attractive rationale, but it depends very
much on these preferences being articulated and understood. For example, if one agency
particularly favored one theory of development or, within a broad universal consensus,
emphasized this or that aspect somewhat more or somewhat less, then it would be in the
interests of donors, and recipients, to have both agencies present and “competing.”
However, the problem is that such differentiation does not seem to be very sharp at all.
Broad objectives and even more specific instrumentalities are similar across the agencies,
with the result that projects often become turf battles, and such coordination as there is, is
often in the form of simply “carving out market share”. A clear statement of the
comparative advantage of each RDB vis a vis the World Bank, subjected to the line of
questioning developed above, would be a good start in strengthening the rationale for
multiple involvement which at times looks simply like duplication.
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