INDUSTRIAL DEVELOPMENT

General Guidelines

The Bank is prepared to consider financial assistance applications for: the implantation and development of new industries designed to export a significant part of their production; implantation and development of new industries replacing imports--particularly intermediate products and capital goods--that meet minimum criteria of regional efficiency; and modernization and increase of productivity in existing industry to make the process of import substitution more economical and facilitate the expansion and diversification of exports.

Loans made or guaranteed by the Bank shall be mainly for financing specific projects, including those forming part of a national or regional development program.

The Bank may also make or guarantee global loans to development institutions or similar agencies of the member countries in order that the latter may facilitate the financing of specific development projects whose individual financing requirements are not, in the opinion of the Bank, large enough to warrant the direct supervision of the Bank.

Minimum amounts are currently in force for direct loans as a result of operational convenience deriving from the existence of economies of scale in loan processing. At present, although the Bank considers direct loans for amounts of not less than US$500,000 in the smaller countries, in practice, most of its direct loans are much larger; only as an exception and particularly during the first years of its operations, has the Bank made direct loans for these minimum amounts.

Direct Loans

In direct loans, the Bank gives priority to projects based on modern technology and efficient plant size that can compete at least with the lowest cost level of the region and those designed to export a reasonable part of their production to markets within or without the region. It also assigns priority to multinational projects and those resulting from the conclusion of industrial complementation agreements that also meet the foregoing standards of efficiency and competitiveness.

The Bank is particularly mindful of the need to avoid unnecessary duplication of investments and production facilities, especially in those sectors where the establishment of plants with economies of scale is feasible.

Global Loans

The Bank considers with special interest the implementation of programs at the sectoral level in various industries designed to modernize, re-equip and increase the productivity of such industries in order to raise them to the level of export industries. These programs may be carried out as global lines of supervised credit through national, sub-regional or regional development institutions. They should be based on prior studies at the sectoral level that may be financed with the assistance of the Bank, the public and private sectors in each country, and the participation of other specialized international agencies.

Global loans should be related to programs of direct technical assistance to the ultimate borrowers enabling them to modernize and increase their productivity with a view to exportation.

Here too, priority is assigned to industries exporting a part of their production to markets within or outside the region.

Technical Cooperation

Technical cooperation projects such as those described below may also be considered by the Bank in its programs:

1. Technical Improvement Projects: Technical cooperation for projects in the areas of marketing, quality control, packaging, product and manufacturing engineering, industrial engineering and productivity techniques. In these areas the Bank seeks the cooperation of other international agencies in accordance with their respective spheres of competence.

2. Support for Industrial Development Institutions: Support in the form of technical cooperation and/or preinvestment for the strengthening of national institutions for planning and financing of industrial development. This support may be for improvement of administrative, financial or technical accounting reorganizations of such institutions. The Bank also offers, when requested, advisory services, with respect to the formulation of sectorial policies, strategies, plans and programs of industrial development.

Feasibility Studies

Projects directed to the preparation of prefeasibility or feasibility studies, establishment or expansion of research and technological institutions, and similar projects to be financed through global preinvestment loans.

Transfer and Acquisition of Technology

The Bank's financing may include items for projects aimed at the acquisition of technological inputs needed to modernize and increase productivity of the manufacturing sector in Latin America, whether through the purchase of know-how or licenses, the contracting of technical consulting services, or the establishment or expansion of research and development services. Operations in this field would be carried out within the framework of the Bank's policy for the promotion of science and technology.

Coordination

The Bank has an understanding with the United Nations Industrial Development Organization (UNIDO) on coordination, exchange, training and cooperation in activities such as identification and preparation of industrial projects, execution of technical assistance programs, training of technical personnel, the conduct of seminars and courses, and industrial development studies.
 

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Prevailing Reference Document: GN-408-3, February 1970.