American Mauricio Clavier Caroni became president of the Inter-American Development Bank (IDB) on October 1, 2020 with one goal: to prevent Latin America from going through another “lost decade.” The official revealed in an interview with “El Mundo” newspaper that his strategy for this purpose is to strengthen the cooperation of the Islamic Development Bank, the largest development agency in the region, with the private sector.
This means attracting investment, which includes near-delays, i.e. moving companies and supply lines currently in Asia closer to their destination markets.
It’s an idea that, given the current rise in the world’s inflation rate, takes on more topics. As Claver Caroni, who was in Spain after COP26, asserts, “The blockages in supply chains we are seeing today are precisely the result of global overinvestment in China,” he said.
To date, the Islamic Development Bank, along with the Government of Japan, is the only organization in the world that funds this type of proximal supply.
The official added that the close supply is not anti-China, but pro-Latin America.
“It’s something I’ve presented to Spanish companies. But I’m not talking about approaching thinking not only in the United States but also in Spain. If there are Spanish companies that have invested their value chain in China or in other Asian countries and want to take that chain to Latin America, they will The Islamic Development Bank financed it. I think the Europeans are starting to see it as an opportunity.”
On whether the bank will finance the whole step or only part of it, the official explained that the Islamic Development Bank will work on structuring a comprehensive financing package based on the company’s needs. It can be transportation, operations, or some other method.
The Islamic Development Bank is already designing its first policy-based loans, to support governments nearby with Colombia. Because there are countries that have seen the benefits and are developing and launching strategies, such as Guatemala, the Dominican Republic, Colombia, Panama and, to some extent, Costa Rica and Uruguay. He noted that although it is clear that the country that could benefit the most would be Mexico.
Japan launched its $1 billion endowment initiative and offered two packages. The first, for Japanese companies operating abroad that want to relocate to Japan, which gave them a very attractive package.
Another, for those who have moved to ASEAN (the economic pact formed by eight Asian countries, including neither China nor Japan) who receive a lower amount.
According to the official, there is a risk that this could be a decade of missed opportunities.
“Most of the improvement in growth we are seeing comes from the increase in the prices of raw materials. But this has already happened in the past. What was done after that with the money? It was largely lost in the electoral and populist platforms,” he said in an interview with the Spanish newspaper.
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