updated 10/11/2007 7:44:35 AM ET 2007-10-11T11:44:35

Nobel Prize-winning economist Joseph Stiglitz said Wednesday that Venezuelan President Hugo Chavez’s plan to create a regional lending bank will be beneficial for South America.

The former World Bank economist said the Bank of the South, due to be founded in Caracas next month, is an important initiative aimed at helping boost Latin America’s development.

“It is a good thing to have competition in most markets, including the market for development lending,” the American economist told reporters during an economic forum. He said the World Bank and International Monetary Fund tend to lay down many conditions that “hinder the development effectiveness.” “One of the advantages of having a Bank of the South is that it would reflect the perspectives of those in the South,” said Stiglitz, who met with Chavez.

Chavez has touted the bank, supported by a group of South American governments, as a counterweight to U.S. influence and a way for the region to chart its own economic course.

Stiglitz, who won the Nobel Prize for economics in 2001, also criticized U.S. trade agreements with Colombia and other countries.

“It is undermining the Andean cooperation, and it is part of the American strategy of divide and conquer, a strategy trying to get as much of the benefits for American companies,” and little for developing countries, he said.

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