From global to local: subnational development banks in the era of Sustainable Development Goals

Financing the implementation of the seventeen Sustainable Development Goals (SDGs) has been a development challenge since the establishment of the 2030 Agenda – especially under the unequal circumstances imposed by COVID-19. This paper aims to better inform this debate by highlighting the nature of Subnational Development Banks (SDBs) in the context of sustainable finance and how they operate within development networks.

To this end, the research method used addresses a comparative study among countries that stand out for the number of subnational institutions in their development systems, Brazil and Vietnam. After comparing the Brazilian and Vietnamese particularities, we present concrete examples of SDBs working to connect local needs to the 2030 Agenda investments. As final conclusions, the study allows to demonstrate that, by being the last mile specialist on the ground, in different localities, with particular backgrounds and contexts, SDBs could be available channels to international resources to address financial needs of local firms and governments, improving both efficiency and effectiveness of development programs and funds. Highlighting the potential of SDBs, this analysis leaves possibilities for a future research agenda on more integrated national development finance systems focused on local impact.

This Research Paper is published in the framework of the International Research Initiative on Public Development Banks working groups and released for the occasion of the 14th AFD International Research Conference on Development. 

It is part of the pilot research program “Realizing the Potential of Public Development Banks for Achieving Sustainable Development Goals”. This program was launched, along with the International Research Initiative on Public Development Banks (PDBs), by the Institute of New Structural Economics (INSE) at Peking University, and sponsored by the Agence française de développement (AFD), Ford Foundation and International Development Finance Club (IDFC).

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