A Borderland Development Bank: An inquiry into the issues

Since the organization of the International Bank for Reconstruction and Development (The World Bank) in 1944, a large number of development oriented financial institutions have emerged throughout the world. By applying their unique form of intermediation to development problems, these Development Banks (DBs), as they have come to be known, have become a major catalyst in the process of economic development. Over the years, numerous proposals for funding borderlands development have surfaced but few of them have directly addressed the possibility of establishing a Borderland Development Bank (BDB). A related proposal was outlined at a conference of U.S.-Mexico border state governors by Carols G. Velez-Ibanez (1983). The proposal called for the establishment of a "Borderlands Development Foundation" which would assist area development in a number of ways; including, stabilizing the region's infrastructure, environment, and population movements. It was also suggested that such a foundation might develop a data base for use in planning and in monitoring demographic, economic, political and social trends in the region. Unfortunately, this rather promising proposal has yet to be realized. This study examines the contributions to development that could be made by a BDB, and the potential public support for such an institution. If a BDB could be organized in such a way as to minimize the Mexican fear of U.S. domination of the bank's activities, it could play a major role in the economic development of the region and strengthen what Hansen (1986b) describes as "the many interdependencies that exist between the Mexican and U.S. borderlands." Most of the development proposals, including government sponsored commissions, have been unilateral, focusing on the needs of only one side of the border, which may explain why they have thus far not been very successful. Perhaps a BDB which enjoyed bilateral public and private sponsorship, and whose mandate was to foster economic development on both sides of the border would stand a better chance of success. The first section of this article discusses the nature of a development bank, the second section discusses the possible impediments to growth along the border, the third section discusses the BDB as a possible solution to these impediments, and the last section provides a summary and concluding remarks.