اصلاحات بخش مالی و توسعه پایدار: مورد کاستاریکا

How can financial sector reform be designed specifically so that it enhances the prospects for sustainable development? This paper begins an analysis of this little-discussed intersection, with a focus on the problems and possibilities facing Costa Rica. Policy changes that encourage financial markets to incorporate long-term environmental sustainability concerns will require moving beyond a standard model of financial liberalization. Flighty financial flows, systemic pressures against innovation, and unpriced environmental externalities all mean that real sector environmental performance will be adversely affected by financial sector dynamics, lacking appropriate policy markers. Financial market policies must encourage market forces to channel capital flows that build productive capabilities based on complementarities between development and environmental quality. Costa Rica's reform process and unusual depth of experience in pursuing sustainable development make it an ideal place for such financial market innovations to be attempted. Getting its incentive system right in financial restructuring could aid immensely in the emergence and application of sustainability-based competitive capabilities. A set of market-based ‘green’ financial reforms is proposed, including tax-advantaged banking and bond programs, rural group lending, and a single certification entity for potential borrowers in these programs.

Much has been written about financial sector reform in developing countries, and also about the problems of financing sustainable development in those nations. But little attention has been paid to the intersection of these issues: How can financial sector reform be designed specifically so that it enhances the prospects for sustainable development? This study is intended to begin to fill that gap, with a focus on the problems and possibilities faced by Costa Rica. Its central arguments are that lacking appropriate public policy innovations, financial markets will not effectively incorporate long-term environmental sustainability concerns; that adopting such policy innovations will require moving beyond a standard model of financial liberalization (see Stiglitz, 1998) and that Costa Rica's reform process and unusual depth of experience in pursuing sustainable development make it an ideal place for such financial market innovations to be attempted. Like the concept of development itself, it is difficult to define ‘sustainability’ in an operationally precise way. Efforts to do so have mostly led to a recognition that in practice it is sufficient to identify a set of widely shared concerns, along with their underlying assumptions and values. Sustainability is generally thought to mean that the interests of future generations are explicitly considered in current choices about the development path, by recognizing growth's spillover effects on the natural ecosystems and social institutions that support human development. In particular, it is thought that sustainable development will require sharply reducing the ongoing, costly (and, in principle, quantifiable) loss of nature's ecosystem services to human society. It is widely assumed that the socio-economic infrastructure inherited from the past — technological, financial, and political — in many respects fails to account for such spillovers, a legacy of times when issues of sustainability were not well understood. Efforts to identify and correct these failures are often motivated also by beliefs that there is intrinsic value in the natural environment and its species diversity, that preservation of social equity and justice is of equal importance, and that the two are closely linked (see for example Costanza and Folke, 1997). In what follows, I focus on problems of environmental sustainability. The need for sustainable development carries its own set of problems in developing countries. Pressure to play catch-up in standards of living often encourages decision makers' adherence to the widespread notion that for now environmental concerns must be downplayed in a sharp tradeoff with development and growth. Although a growing body of research questions the necessity of such a tradeoff (Porter and van der Linde, 1995; for a Costa Rican application, see Dessus and Bussolo, 1998), the notion remains influential. This problem may be intensified by the state of institutional development in the public sector: even where environmental regulations are on the books, enforcement is often lax or nonexistent. An additional constraint faced by developing countries is that financial resources are more scarce and financial structures less deep and broad. The financing requirements for sustainable development in the less developed world are immense. Meanwhile, external concessionary aid in general has become sharply limited, and assistance aimed at sustainability in particular shows little prospect of even approaching the level of need (Panayotou, 1997). Lacking a basic reversal of this trend, private financial flows will have to be harnessed to the maximum possible extent to the task of financing sustainability. It is therefore important at the outset to specify the analytical lens through which the problem of financial reform policy will be viewed. Economic impacts on the environment are mediated, as with any dimension of real sector activity, by the structure and performance of the financial system. Financial markets are comprised of social processes and institutions, and are subject to social and institutional dynamics in handling their stock in trade: promises to pay in a highly uncertain future. Two general problems are most relevant here. First, financial markets may over- or under-fund classes of economic activity that have captured or repelled investor interest. Post Keynesian research has emphasized this problem of ‘flighty’ financial flows (Grabel, 1995 and Kregel, 1998). Unsustainable bubbles in some markets — commercial real estate, in many recent cases — may coexist with other markets in which potential borrowers cannot get funded at rates commensurate with apparent risks — as, for example, mortgage applicants in minority neighborhoods. Second, capital allocation systems, depending on their institutional and policy frameworks, can enhance or discourage the building of productive capabilities among firms in the private sector. Competitive capabilities theorists have focused on this dimension of national financial structures (for example, Porter, 1992). Long-term investing and close capital supplier–user relationships, institutionalized roles for non-owning stakeholders, and evaluation of corporate performance along multiple dimensions all tend to encourage strong, innovative economic capabilities. Dispersed and fleeting financial relationships, along with shareholder dominance and unidimensional corporate performance measures, like stock price or quarterly profits, tend to bias companies toward adaptive rather than innovative strategies (Lazonick and O'Sullivan, 1996): squeezing more out of old ways of doing things. Both problems may affect financing options for organizations with competitive strategies based on environmentally friendly products or processes that are new and unlikely to offer large, short-term payoffs. Financing sustainable development may encounter particular problems because financial market actors, like those in the markets for goods and services, will tend to ignore environmental spillovers in making privately desirable choices. Lenders' portfolio decisions are based on the expected risk-return characteristics associated with borrowers' projects. Unless the existing regulatory regime causes product market capital seekers to internalize all social costs fully, the noninternalized costs and benefits of prospective investments will not figure into capital suppliers' decisions. This problem in capital allocation is compounded by the relative newness and unfamiliarity of emerging technologies that are more environmentally friendly. Given the asymmetry of the information available to borrowers and lenders (Stiglitz and Weiss, 1981), the latter will tend to be biased toward projects using traditional techniques. These three concerns — volatile capital flows, financial system impacts on organizational capabilities building, and unpriced environmental externalities — share an emphasis on the fundamentally imperfect information available to financial market decision makers. Their upshot is that financial markets on their own may generate outcomes that are sub-optimal, in comparison with results that could be achieved with appropriate environmental policy incentives. The policy questions of interest here are those surrounding financial reform in developing countries. Unfortunately, the financial reform programs traditionally urged upon developing countries by the multilateral lending agencies have rarely displayed much concern in this direction. Despite some recent changes in emphasis, financial reform in practice generally continues to be driven by a narrow version of the ‘financial repression’ critique first advanced by McKinnon (1973) and Shaw (1973). This critique emphasizes the negative effects of governmental interest rate and other financial controls, as well as state banking: low levels of financial intermediation, fragmented capital markets, capital flight, preferential treatment of well-connected groups, and large borrow-lend spreads driven by state banks' inefficiencies. While developing country financial sectors have indeed been plagued by all of these problems, initial applications of the suggested financial liberalization — privatization, dismantling of capital controls, and rate deregulation — resulted in financial crises in many countries, beginning with the Southern Cone of South America (Diaz-Alejandro, 1985). Both macroeconomic and microeconomic imbalances were associated with these early reform efforts, as real interest rates remained extremely high, rapid credit growth was concentrated heavily at very short maturities and borrowers' activities tended toward the high risk and speculative. Subsequent financial liberalization thinking has paid more attention to the sequencing of reforms, with real sector stabilization accorded first place (McKinnon, 1991), and to appropriate bank safety standards and governmental oversight (for an application to Costa Rica, see Lizano, 1995). But the dominant liberalization approach continues to eschew any role for policy in affecting the overall pace and sectoral allocation of domestic and international financial flows. Lacking appropriate incentive structures, recent reform efforts have been dogged by the kinds of problems to which the analytical framework suggested above points; the mid-90s Mexican peso crisis and the late-90s Asian financial crisis are perhaps the most notorious examples (Grabel, 1999). I will argue below that in the presence of massive externalities of the kind that surround sustainable development, and the need to fund deeper and broader creation of environment-friendly organizational capabilities, a hands-off reform approach will not result in socially optimal financial performance. Government must play a crucial role in ensuring that the institutional design and operating rules of the financial sector encourage economic decision makers to incorporate sustainability-related costs and benefits into their actions (Stiglitz, 1994). Financial reform should be designed to encourage private sector activities that ease or even eliminate the perceived development–environment tradeoff, by incorporating from the start incentive structures that will encourage long-term, capabilities-enhancing investments in environmentally friendly activities. Such policies will be more easily put in place if done as an integral part of overall financial sector reform, not added on afterward. Many developing countries are presently examining and/or implementing financial structure reforms, making it an ideal time to consider these kinds of effects. Even appropriate financial reform in and of itself, of course, will not solve the problem. When it comes to encouraging sustainability, product and financial market restructuring must be seen as two blades of a scissors. Each can push private decision makers toward internalizing the full social costs and benefits of actions affecting the environment. Both depend critically on public action. Indeed, “... most of the impetus for progress toward sustainable development must come from voters, the governments they elect, consumers, parents, and citizens' groups. All of these will have to cooperate to build a new societal framework in which business will act” (Schmidheiny and Zorraquı́n, 1996, p. 16). Given movement toward an appropriate ‘societal framework’ for product market decision makers, financial market reform can play a significant role. Both financial and product market policies need combinations of penalties and inducements that allow market forces to channel resources in accordance with countries' natural and historical endowments, to maximize the potential for uncovering and exploiting complementarities between development and environmental quality. Such complementarities have received increasing attention in recent years (Porter and van der Linde, 1995). They may include (among others) use of plentiful renewable energy sources, development of environmental services industries, establishment or penetration of ‘green’ product market niches, and introduction of performance-enhancing but environmentally friendly technologies. Costa Rica is a country with considerable experience in public and private sector efforts to slow and reverse environmental degradation, and even to build upon its natural assets as a basis for sustainable kinds of economic development. These efforts have generated a whole set of technologies and expertise that could serve as the basis for vigorous competitive capabilities in related industries. It is also a nation whose policy makers have been grappling with questions of financial sector reform. Unfortunately, Costa Rica's early steps toward financial liberalization have been associated with high real interest rates and a concommitant tilt toward short-term credit allocation. Costa Rica thus provides an ideal case study for exploring the issues raised here.