3.2. Geographical operation In this subsection, we classify PDBs and DFIs based on their geographical operation. Regarding the geographical scope of their operations, PDBs and DFIs can operate at four levels: international, regional, national, and subnational. To enrich our database, we have collected information on whether PDBs and DFIs restrict their operations to specific areas within and beyond national boundaries. For any single PDB or DFI, international and regional are marked as mutually exclusive, as an institution that can operate internationally can, by definition, also operate in its own geographical region. We apply the same exclusion rule between national and subnational, to identify institutions that are allowed to operate only in a specific territory within national boundaries. If a PDB or DFI can invest in any country without restricting its operation to particular regions or areas, we classify it as “international.” As most multinational PDBs and DFIs are established to finance developing countries, they can be classified as “international” as long as they do not restrict their operation to certain regions or areas within the developing world. Otherwise, we classify those that confine their operations to certain regions or areas as “regional.” Here “regional” does not necessarily refer to geographical continents or subregions; it can also refer to restriction in geographical operations due to political or religious reasons, such as only operating in Islamic countries. By the same token, if PDBs and DFIs can operate in any area within national boundaries, they are classified as “national”; otherwise, if they can only operate in certain areas within national territories, they are classified as “subnational.” To group similar entities into one subcategory, we tabulate geographical operation with the jurisdiction levels of their ownership, namely, multinational, national, and subnational, to obtain a more homogeneous set of institutions in each subcategory. 1. Multinational PDBs and DFIs have two types of geographical operation: one is a global operational scope and the other is a regional operational scope. Of the 47 (9%) multinational PDBs and DFIs, 8 (1.5%) operate without geographical restriction, whereas 39 (7.5%) focus their operations on certain regions. A. Multinational PDBs and DFIs with a global operational scope, whose operation is not limited to specific regions or areas in developing countries. Below are some examples: • The World Bank Group 9 has an international operational scope without restricting its activities to certain regions, though today it primarily focuses on developing countries, after having financed the reconstruction of developed countries in the wake of WWII.
Though the IBRD focuses its operation mainly in MICs and the IDA concentrates its assistance primarily in LICs, we merge the two into the World Bank in our database, as explained in Section 3.1. Hence, the World Bank as a whole can provide financial support to both MICs and LICs. 9
39
