Search

Every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it … He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. – Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations , book IV, ch. II, 1776 With growing volumes of financial flows to developing countries, how do we know whether the RDBs are fulfilling their stated mission and not competing with private capital? When all borrowing members in their respective regions are developing countries, what drives RDBs’ decision-making? Are they driven by the borrower's need for credit (even if risky for the RDB)? Or, do they prefer safer investments where they are more likely to get paid back, but also where there is a higher likelihood of other competing credit sources? Further, do the political interests of powerful donors, or the recipient's level of democracy drive loan disbursements? This chapter provides the first step in answering these questions by evaluating RDB loans according to the economic, social, and political contexts of their borrowing members. The previous chapter established a basis for the aggregate, regional level lending by the RDBs and examined the indicators for a select group of countries in each region. In this chapter, I statistically locate the RDBs’ policy (represented by loan disbursements) on the development institution to bank continuum, as represented by select socioeconomic indicators. Furthermore, in this chapter, I test whether hegemon(s) of the RDBs use their power to influence loan making. Finally, I examine the extent to which the Cold War is associated with the level of loans that borrowing member countries receive. International Financial Institutions (IFIs), including the RDBs, have been at the subject of policy debates concerning their role. The central themes of the controversy are (1) whether they meet the objectives they were created to fulfill as public institutions, which include their contributions to poverty alleviation and development, and (2) whether IFIs serve the national interests of their largest donors (hegemons), making their lending practices commensurate with donor interests rather than with institutional objectives (to the extent that they differ).

In a study that contributes to International Relations and International Political Economy theory, Ruth Ben-Artzi raises substantive issues relating to aid, development, international relations and globalization. Regional development banks (RDBs), designed by politicians and economists to maneuver through labyrinths of economic, social, and political development, possess the potential to be central players in the long-term planning involved in healing and advancing poverty-plagued regions. However, RDBs in particular have received little attention. With a systematic analysis comparing four central regional development banks, this book explores why there's a variation in strategy despite similar institutional design. The formal arrangements and raison d'être of RDBs is to assist developing countries in the process of poverty alleviation - a task that is often a risky investment. Focusing on the dichotomy between their banking and development roles, Ben-Artzi demonstrates that RDBs are potentially critical catalysts in the fight against poverty, even with their institutional limitations.

Neither a borrower, nor a lender be; For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry. – Hamlet, I, iii, 75 Have RDBs evolved in a changing global environment? What were the reasons for their creation – political, economic, and social – and are they still relevant? The twentieth-century motivations for creating international institutions such as the UN (WWII), the Bretton Woods Institutions (the Great Depression and WWII), and NATO and the RDBs (the Cold War) have given way to an increasingly globalized world economy. IFIs share credit for these global changes, but it also means that they might have to reinvent themselves so that their contributions remain effective. This chapter traces the historical developments of the RDBs. An examination of the development banks’ origins, their evolution as institutions, and their structural components is a valuable basis for discerning the lending policies of the RDBs over the years in order to determine whether they are motivated by political, economic (banking-centered goals), or social factors (developmental goals). The reasons (both declared and implicit) for the RDBs’ creation shed light on their development as institutions and the political relationships between the member states. Understanding the RDBs’ institutional design – including membership, decision-making and voting, the assignment of veto power, staff, Articles of Agreement, budget, and credit ratings – is essential for evaluating the banks’ activities. Both the political environment that paved the way for the establishment of the RDBs and the institutional model upon which they were created, constitute the foundation for political developments within the institutions and between them and their members. Moreover, global political and economic developments, often informed by evolving norms and ideas, help shape states’ attitudes toward multilateral institutions, and enable some of these institutions to outlive the political reasons that contributed to their creation. In sum, by presenting an overview of the RDBs’ history and the interests – internal and external – that shape their institutional design, this chapter sheds light on the controversy surrounding their role as creditors.

This association of poverty with progress is the great enigma of our times. It is the central fact from which springs industrial, social, and political difficulties that perplex the world, and with which statesmanship and philanthropy and education grapple in vain. From it come the clouds that overhang the future of the most progressive and self-reliant nations. It is the riddle which the Sphinx of Fate puts to our civilization, and which not to answer is to be destroyed. So long as all the increased wealth which modern progress brings goes but to build up great fortunes, to increase luxury and make sharper the contrast between the House of Have and the House of Want, progress is not real and cannot be permanent. – Henry George , Progress and Poverty, 1879 In this era of globalization – where international financial markets affect developed and developing countries alike, and where financial flows as well as economic crises spread across borders and oceans with remarkable ease – the role of multilateral financial institutions in the international financial scheme is crucial. These public institutions, designed by politicians and economists to navigate the labyrinth of economic, social, and political development, possess the potential to be central players in the long-term planning involved in healing poverty-plagued regions and advancing their economies. This formidable task offers the invaluable payoff of furthering global economic and financial stability and improving human welfare. Consequently, the issues of aid and development that are related to globalization have been at the center of academic debates. Multilateral financial institutions, designed to implement global financial policies, have been an integral part of these debates and have come under increasing scrutiny. Critics vary from those who believe that these institutions do more harm than good by contributing to the “moral hazard” problem and should therefore not exist, to those who believe that they can play an important role in development, but need to be reformed (Stiglitz, 2002, and Sachs, 2005). But even if one begins in the second, more positive, camp, there is still substantial disagreement as to how these institutions should function so that they can be both constructive and efficient. Much of this controversy stems from limited knowledge about how multilateral financial institutions work and what they are designed to do.

Numerical simulation of compressible, inviscid time-dependent flow is a major branch of computational fluid dynamics. Its primary goal is to obtain accurate representation of the time evolution of complex flow patterns, involving interactions of shocks, interfaces, and rarefaction waves. The Generalized Riemann Problem (GRP) algorithm, developed by the authors for this purpose, provides a unifying 'shell' which comprises some of the most commonly used numerical schemes of this process. This 2003 monograph gives a systematic presentation of the GRP methodology, starting from the underlying mathematical principles, through basic scheme analysis and scheme extensions (such as reacting flow or two-dimensional flows involving moving or stationary boundaries). An array of instructive examples illustrates the range of applications, extending from (simple) scalar equations to computational fluid dynamics. Background material from mathematical analysis and fluid dynamics is provided, making the book accessible to both researchers and graduate students of applied mathematics, science and engineering.

This chapter is concerned with the main topic of the monograph, namely, the solution of the GRP for quasi-1-D, inviscid, compressible, nonisentropic, time-dependent flow. In Section 5.1 we formulate the problem and study its solution in the Lagrangian and Eulerian frames. In particular, we state and prove the main ingredient in the GRP method, Theorem 5.7. A weaker form of this theorem leads to the “acoustic approximation” (Proposition 5.9). Summary 5.24 gives a step-by-step description of the GRP analysis. In Section 5.2 we present the GRP methodology for the construction of second-order, high-resolution finite-difference (or finite-volume) schemes. Starting out from the (first-order) Godunov scheme, we present the basic ( E 1 ) GRP scheme. It is based on the acoustic approximation and constitutes the simplest second-order extension of Godunov's scheme. This is followed by a presentation of the full array of GRP schemes (as well as MUSCL). Generally speaking, the presentation in this chapter follows closely the GRP papers [7] and [10]. The GRP for Quasi-1-D, Compressible, Inviscid Flow In Section 4.2 we studied the Euler equations (4.45) governing the quasi-1-D flow in a duct of variable cross section. We emphasized in particular the role of the Riemann problem (“shock tube problem”), namely, the IVP subject to initial data (4.100). As we shall see in this chapter, the solution to the Riemann problem is a basic ingredient in the numerical resolution of the flow.