The World Bank and the Asian Development Bank: Should Asia Have Both?

Abstract

This paper examines the complementary and competitive roles of the World Bank and the Asian Development Bank (ADB) in Asia given the backdrop of a changing world in which development priorities and challenges are changing rapidly and the rapid expansion of financial flows to developing countries is challenging the influence of these organizations. The paper highlights changes to the international aid architecture, its increasing fragmentation, the rise of non-traditional donors, and recent efforts at improving aid coordination. With this background, the paper examines the roles of the World Bank and ADB in Asia, provides some comparisons of their performance, notes their overlapping responsibilities, and explains current approaches to coordination and cooperation between them. After examining alternative approaches toward improving the division of labor between the two organizations, the author concludes that the most likely scenario will be one of “muddling through” in which stakeholders are likely to tinker at the margins at sharpening the specialization of each institution rather than push through any radical reallocation of financial and knowledge management responsibilities.