Regional Development Banking
for Jobs and Productivity

The Formula for National Prosperity is simple:
Yes it's possible. Here. Right now. And the key, not surprisingly, is money.

Job-creation requires capital - in sufficient quantity and with guaranteed longterm financial reliability to ensure a business is properly set up, and able to maintain the highest international standards in design, production and marketing. Our current banking system does not provide this.

A dedicated Development Banking sector can spread growth across the nation, creating jobs and providing the wherewithal for existing companies to increase their competitiveness. Investment targeted regionally can bring industry and growth to traditionally under-developed areas.

Project-secured Investment

Traditional banking practice requires pre-existing assets as security, and loans carry no long-term commitment.

Development Banking avoids these two limitations of traditional banking by making a long-term commitment based on an intimate involvement with the business or project in which it is invested. This facilitates the creation of new business and new jobs, as well as providing secure finance with which existing business can maximize quality and productivity.

The two broad principles of Development Banking
focus on analysis, and commitment.

The Development Bank begins by thoroughly researching each loan proposal from design to production, management and sales, calling on outside expert advice and assistance where necessary. A successful loan recipient will receive full back-up support in a close working and constructive partnership with the Development Bank, both on start-up, then continuously monitored with an ongoing flow of performance data. The Development Bank would levy a fixed charge covering its administrative costs, plus a small insurance premium.

With investment risk minimized through proper, pre-investment research and positive on-going monitoring of physical production, sales, and accounting, the business itself becomes the security.

By setting up Development Banks to operate at regional level, focusing on regional and local needs, investment benefits can be spread widely and uniformly across the nation, avoiding the usual pockets of non- or under-development.

A percentage of the investment charge should also be set aside to fund apprenticeships and on-location training. High youth unemployment is largely caused by the mismatch between the skills that young people offer and those prospective employers need. Indeed, countries with the lowest youth jobless rates have a close relationship between education and work. Well trained apprentices ensure a smooth flow of new talent to provide for growth and replacement of retiring personnel.

Many of today's successful businesses grew over many years and a long hard climb, starting with minimal capital, operating on a shoestring, and reinvesting every penny of profit. Regional Development Banking can provide sufficient capital for a good business venture to start at full operation, properly equipped for maximum productivity.

Indeed, by conditionally requiring the highest standards of product and service quality, Development Banking can increase competitiveness, and the high level of productivity which creates real and lasting prosperity.

Most significantly, Regional Development Banks can create jobs and industries NOW, with the guaranteed longterm finance needed to maximize productivity and most importantly, maximize quality.

Development Banking in action

Perhaps the most widespread and beneficial in their coverage are the German Landesbanken, or Regional Banks.

In 1818 the Swedish government stunned Europe by offering 160,000 Taler to the German province of Westphalia as reparation for the damages incurred when Swedish and Dutch soldiers marched through the province during the Napoleonic Wars. This money was decreed the property of all Westphalia by its President, Freiherr von Vincke. And through the Westphalian Hilfskasse, or 'Assistance Bank' established for the purpose, the funds were used to develop the region's economy and pay for public-works projects. This proved highly successful, prompting the King of Prussia to order that a similar bank be created in the Rhineland in 1847. Both banks later became Landesbanken (Regional Banks), and were instrumental in making the Rhine-Westphalia region one of the most productive industrial areas in Europe.

In the post-WW2 years, the Landesbanken again played a major role in the creation of Germany's 'Economic Miracle', in particular through the provision of secure on-going finance to the German Mittelstand (small and medium-sized companies) in their respective regions. With 3 million mid-sized businesses, the Mittelstand industries employ more than 70% of German workers and contribute roughly half the country's GDP. And Germany has continued this tradition of investment support for industry.

The original, the 'Big Brother' of German public industrial banks, KfW banking group is a German government-owned development bank based in Frankfurt. Its name originally comes from Kreditanstalt für Wiederaufbau, or Credit Institution for Reconstruction. It was formed in 1948 after World War II as part of the Marshall Plan. KfW is led by a five-member Managing Board which in turn reports to a 37-member Supervisory Board. The Supervisory Board is chaired by the Federal Minister of Economy and Technology.

The concept of investment based on, and secured by the project itself backed by continuous monitoring is basic and simple. It can create jobs, economic expansion and productivity anywhere without increasing government debt.

Development Banking can spread growth across the regions, maximizing economic capacity, creating jobs and providing the wherewithal for existing companies to increase their competitiveness. And the benefits will stretch into the future as a thriving, broadly based economy sends a positive signal to young people providing the prospect of a challenging, well-paid job as the sure reward of education.

The Formula for National Prosperity is very simple:

Dedicated, Project-secured Development Banking can make it happen.

Despite the negative human and economic effects of unemployment, and the desirability of full productive use of all economic resources, the ability to expand an economy to full capacity cannot presently be realized, for as the economy expands to near-full employment, the danger of inflation causes the Central Bank to put the brakes on.

Full Employment. Zero Inflation. And a Fair Day's Pay.

       internet arton publications