Why do regional powers such as Brazil, South Africa, or Russia undertake
different collective strategies to supply public goods in their regions of
influence? When do those states prefer to delegate competences to existent
multilateral financial institutions, such as regional development banks
(RDBs), and when do they prefer to make use of their own national financial
instruments? Why do those states create new RDBs that challenge the existing
ones? The article builds and tests a set of hypotheses based on the interplay
between capabilities and legitimacy to help answer these questions using
contemporary South America as a case study. Through a process tracing analysis
carried out for the period 2000–15, the article explains the different
strategies undertaken by two states, Brazil and Venezuela, to supply
infrastructure in the region, ranging from the use of the Brazilian National
Development Bank to the creation of a new Bank of the South. It is suggested
that the low capabilities and legitimacy expectations of both states explain
the rising importance of external actors in the supply of regional public
goods that we are currently witnessing in South America