Latin American Capital Markets

204 RUBEN LEEond stage should be to implement the results of the first stage. Only summary aspectsof the second stage of the strategy are described here, not least because its developmentrequires that the first stage be completed. It is vital to stress at the outsetthat the strategy is critically important for the development of the region, that it willbe difficult but very worthwhile to achieve, and that it will require support at the highestpolitical levels.Key QuestionsIn preparing a broad strategy of this nature, it is crucial that the key questions it needsto address be specified in advance. If this is not done, it is likely both that the strategywill become unfocused and that its output will not be useful. It is recommended thatthe strategy deliver answers to four broad sets of questions relating to the benefitsof integration, the determination of the region or regions to which the strategy shouldapply, the barriers to integration, and the method by which the barriers should beremoved.Benefits of IntegrationWhat are the benefits of regional capital market integration? Answering this questionis important to obtain support for the whole process of regional capital market integration.The benefits integration can bring need to be analyzed and widely disseminated.Among the benefits that should be identified are lower prices for all financialservices; more efficient, more liquid, and broader securities markets; innovative financialproducts and services; an industrial transformation of all sectors of the capitalmarkets industry; cheaper financing for companies; more efficient allocation of capital;higher returns on investments; enhanced risk-return frontiers; and improved macroeconomicperformance.Determination of the RegionWhat parts of the entire region of Latin America and the Caribbean should be coveredby the strategy? If the region is taken to include the whole of Latin America andthe Caribbean, it will be difficult for the strategy to deliver more than high-level proposals,which are unlikely to be implemented.The smaller the number of countries inthe designated region, the more likely the strategy will be successful, but the less im-Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub