Tamilla Tagieva

Kurzexposé zur Promotion von Tamilla Tagieva

Committed to Development Mandate? Comparing Development Assistance Provided by KfW and BSTDB

Tamilla Tagieva is a PhD candidate from Uzbekistan. She earned her master degree in Global Political Economy taught at the University of Kassel (Germany). Currently, she works on her PhD dissertation at the University of Kassel and receives scholarship from the German Academic Exchange Service (DAAD). Her research interests include such topics as international development, industrialization, small- and medium-sized enterprises and development banking.

Herr and Priewe in their book on Macroeconomics of Development and Poverty Reduction (2005) propose their endogenous growth model, where they show the link between finance and economic development. They, in particular, develop Schumpeter and Keynes’s ideas and show at the macroeconomic level, how credit may trigger economic growth. For them, availability of credit directly influences investment levels, therefore stable and working banking sector, plus low interest rates and available credit lead to high investment, which then translates into high economic growth (Herr and Priewe 2005: 77).

Insufficient finance and absence of long-term credits are two widespread problems (among others), which developing countries experience. Small firms and households have difficulties accessing formal credit markets, because they have no sufficient collateral. Also, amount of credit requested by small- and medium enterprises (SMEs) can be very small, so that commercial banks may choose to give large amounts of credit to big firms due to the existing economies of scale. This may lead to credit rationing for the majority of population and hence less investment.

In this regard, development finance can help correct the aforementioned market failure by virtue of carrying out projects promoting financial inclusion and strengthening domestic financial sector. Better access to financial resources can have positive impact on poverty. Moreover, improved access to loans may stimulate entrepreneurship and innovation through reducing investment barriers. Development finance is also known for being able to provide long-term finance, because in many low-income countries the market for long-term credits is underdeveloped or even absent. Long-term credits are said to be vital for investment in productive capital (that is long-term in nature) (Herr and Priewe 2005: 157). Commercial banks in developing countries do not usually engage in maturity transformation, which decreases the volume of capital to be given for medium and long-term investments. Larger enterprises, which are connected to multinational corporations through ownership, management or procurement of products have better chances to get scarce loans, while SMEs do not appear to be as “powerful”.

The present PhD dissertation aims to explore the SMEs sector of the Black Sea countries and the way this sector is being supported by governments, local banks and institutions as well as international entities. Particularly, SMEs of Georgia and Armenia will be researched. The present research is a qualitative study; therefore during field trips to Georgia and Armenia numerous interviews and surveys will be conducted.