Development & Aid, Economy & Trade, Environment, Global, Global Geopolitics, Headlines, Poverty & SDGs

FINANCE: Study Urges Regional Approach to Development

Emad Mekay

WASHINGTON, Mar 22 2007 (IPS) - The World Bank, which lends billions of dollars for development projects in poor nations, should put more funding into multi-country initiatives such as roads and joint electric grids, which have shown greater benefits to borrowing nations, according to the Bank’s internal monitor.

“A stronger Bank role, if underpinned by a shift to a more strategic approach, could help countries realise this increasing potential of regional cooperation,” says an analysis released Thursday by the Bank’s Independent Evaluation Group (IEG).

It urged the Bank to establish more effective regional programme strategies and integrate them into its Country Assistance Strategies, prescriptions for economic liberalisation that borrowing nations agree to in return for loans.

“The potential contribution of regional programmes is likely to grow as the cross-border dimensions of health, infrastructure, environment, and trade facilitation take on ever-increasing significance,” says the report.

Titled “The Development Potential of Regional Programmes”, it says that regionally coordinated investments in roads, for example, are helping some of the world’s 31 landlocked countries to connect to wider markets.

Regional electricity projects are helping to improve the supply and distribution of power, with small countries getting access to reliable, lower cost energy, especially in West Africa.

Cooperation across borders is also increasingly helping to control the spread of communicable diseases like malaria and HIV/AIDS, and helping to manage the 60 percent of the world’s freshwater that derives from shared river systems, says the IEG.

The report gives successful examples of regional cooperation. In Eastern Europe, eight countries have cooperated to harmonise their customs procedures to reduce truck transport costs and advance their larger objective of economic integration.

Similar programmes have restored fisheries in Lake Victoria, which is shared by Tanzania, Uganda and Kenya, as well as building knowledge on child protection in the Middle East.

“Regional programmes offer great opportunities for tackling some of the tough, emerging problems in development,” said Vinod Thomas, director-general of the IEG.

The evaluation, which assesses World Bank support for regional development programmes over fiscal years 1995û2005, finds that most of the programmes have been useful in achieving most of their development objectives.

The review studied 19 regional programmes and examined the Bank’s total portfolio of some 100 regional operations.

However, it notes that despite the success of regional projects, over the past 10 years, they have accounted for just one percent of the Bank’s portfolio, which was more than 22 billion dollars last year. Only three percent of all international loans and aid go to regional projects.

Africa has accounted for half of all support. Another half of all projects have focused on the environment and have been funded with grants from the Global Environment Facility, which gives loans to environmental protection projects.

The report urges the Bank to pump more funds into such projects and to work to strengthen the international architecture for financing regional development programmes.

The Bank could also create more corporate incentives to provide effective regional programme support, the report says.

Some non-governmental organisations say that large infrastructure projects are often counterproductive. Given their scale, such mega-projects pose the greatest challenges to environmental sustainability and social justice, with major impacts on local communities, they say.

In this development framework, mountains, forests, and wetlands are seen as barriers to economic development, while rivers become the means for extracting natural resources.

A group of non-governmental organisations said in a statement that pan-regional projects such as the Integration of Regional Infrastructure in South America (IIRSA, as it’s known in Spanish) has threatened to ramp up the already unsustainable foreign debt of many South American nations.

The groups, including Amazon Watch, the Bank Information Centre and Colectivo de Estudios Aplicadas al Desarrollo Social, say the IIRSA, which is sponsored by the Inter-American Development Bank, has slated some 40 mega-projects and hundreds of smaller infrastructure improvement projects for potential financing, at a total bill of 37 billion dollars.

But the IEG report’s authors told IPS that such problems haunt nations whether they are involved in regional projects or not. All participating countries assume a level of debt, and that debt sustainability is a factor in determining the choice of possible regional interventions, just as in the case of single country programmes.

“Such challenges face… infrastructure projects whether they are within single countries or cross-border,” said Catherine Gwin, who authored the IEG report. “Regional programmes need to apply the same environmental and social safeguards as single country projects to be sustainable and pro-poor.”

“Regional programmes focused on water resources management, for example, have directly addressed degradation of wetlands, watersheds, and water quality causing loss of livelihoods and health issues for communities in the water basin. Such programmes can be critically important for resolving conflicts among countries which have conflicting needs for the water for such uses as irrigation and energy,” she said.