Multilateral development banks (MDBs) represent one of the most successful types of international organization created in the post-World War II era. Over 20 MDBs currently operate in the world, and two more—the Asian Infrastructure Investment Bank and BRICS New Development Bank—are due to begin operations in 2016.
A key reason for the enduring popularity of MDBs is their financial model. With a relatively small amount of capital contributions from shareholder governments, MDBs can borrow much larger amounts from private capital markets at attractive financial terms, and on-lend those resources for development projects with enough of a margin left over to cover administrative costs. Thus, government shareholders can have a very significant development impact (in financial terms, at least) with a relatively small budgetary outlay (Table 1).1