New Development Bank

Definition

The New Development Bank (NDB) is a multilateral development bank established by the BRICS nations—Brazil, Russia, India, China, and South Africa—in 2014. It aims to provide financing for infrastructure and sustainable development projects in emerging economies, addressing the gaps in global financial governance and promoting economic growth among its member countries.

5 Must Know Facts For Your Next Test

1. The NDB was officially launched in July 2015 during the BRICS summit held in Ufa, Russia.
2. One of the main goals of the NDB is to provide an alternative source of funding to existing institutions like the World Bank and IMF, particularly for developing countries.
3. The NDB has a capital base of $100 billion, allowing it to finance various projects aimed at improving infrastructure and fostering sustainable development.
4. In addition to lending, the NDB focuses on promoting cooperation among BRICS nations in areas such as knowledge sharing and capacity building.
5. The NDB’s emphasis on green projects aligns with global efforts to combat climate change and promote environmental sustainability in development.

Review Questions

• How does the New Development Bank address the challenges faced by emerging economies in accessing funding for infrastructure projects?
  • The New Development Bank provides an essential alternative source of funding specifically tailored for emerging economies that often struggle to secure financing from traditional institutions. By focusing on infrastructure and sustainable development projects, the NDB addresses significant gaps in funding that hinder growth in these countries. The bank's establishment by BRICS nations also reflects a collective effort to enhance financial cooperation among emerging economies, enabling them to pursue development goals more effectively.
• Evaluate the impact of the New Development Bank on global financial governance compared to traditional institutions like the World Bank.
  • The New Development Bank represents a shift in global financial governance by offering a more flexible and accessible approach to funding development projects compared to traditional institutions like the World Bank. By prioritizing the needs of emerging economies and fostering regional collaboration, the NDB challenges the dominance of Western-centric financial institutions. This competition can lead to improved services and conditions for borrowing countries while encouraging existing institutions to reform and adapt to the changing dynamics of global finance.
• Assess how the establishment of the New Development Bank might influence international relations among its member countries and beyond.
  • The establishment of the New Development Bank may significantly influence international relations by strengthening ties among BRICS nations through economic cooperation and shared development goals. As these countries collaborate on funding infrastructure projects, it fosters mutual dependency that can enhance political alignment. Additionally, by providing an alternative financing mechanism, the NDB may encourage other countries to reconsider their engagement with traditional institutions like the IMF and World Bank, potentially reshaping alliances and economic partnerships on a global scale.

Related terms

BRICS:

A group of five major emerging economies: Brazil, Russia, India, China, and South Africa, known for their significant influence on regional and global affairs.

Infrastructure Development: The construction and improvement of foundational facilities and systems such as transportation, utilities, and communication necessary for economic activity.

Sustainable Development:

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs, often encompassing environmental, social, and economic dimensions.