Introduction
The Asian Infrastructure Investment Bank (AIIB) is a large-scale initiative created under the leadership of China (Mishra, 2016). This international organization has two key objectives. First, its task is to enhance financial cooperation in the Asia-Pacific region. Second, the activities of the bank are aimed at financing infrastructure projects of different scale in Asia. The purpose of this paper is to discuss the implications of this initiative and analyze three global connections with regard to the project.
Background Information and Keywords
It is worth noting that benefit sharing is relevant to almost all countries in the world. In its turn, the development of infrastructure is a key factor in this activity. At present, Asia’s needs for infrastructure investments have reached an immense scale, and they are constantly increasing in different directions (Mishra, 2016). In particular, these needs are intense in such areas as transportation, energy, and water. In order to support the development of the market effectively, it is necessary to develop infrastructure adequately, which will also have a positive impact on environmental and social conditions.
As stated above, in order for the region’s economy to develop, it is essential to obtain investments in infrastructure. According to experts in the field, to achieve this goal, it will be necessary to receive an investment of 8 trillion US dollars (Syadullah, 2014). However, international funds are not able to cover such expenses. In this regard, a number of countries have established a new development bank (AIIB).
Some analysts argue that this bank will compete with key institutions such as the World Bank or the International Monetary Fund (Syadullah, 2014). In the course of this work, such keywords as “natural resources development” and “political implications” can be identified. It is important to note that global connections will be considered in terms of the importance of the bank for the development of the oil and gas (and other resources) infrastructure as well as the political implications of joining the project.
Global Connections
The first global connection, which is related to the implementation of the project, is the sustainable development of countries. Priority directions that will be financed by the bank are energy, transport, water supply, environmental protection, and other areas. It is paramount that resources allocate to the infrastructure of developing regions. Thus, the participating countries will be able to attract more investment in the aftermath (Chin, 2016). The AIIB will give regions an opportunity to achieve better representation in financing for development. Due to mutual assistance and effective cooperation, the bank will ensure the economic growth of countries (Chin, 2016). In their turn, communities will benefit greatly from investment flows. In addition, the project will guarantee that environment is protected.
The second global connection is the creation of worldwide social and environmental safeguards (Hanlon, 2017). Clear social and environmental terms will be built into the bank’s activities, which will be observed by all the 58 member-countries. It will allow achieving the sustainable development of all the parties. Due to the fact that some organizations have many years of experience, they will be able to share it with other institutions so that less experienced participants can establish new international standards (Hanlon, 2017).
Before the projects have been planned and investments have been allocated to the economy, financial institutions will have to provide guarantees that their initiatives (to which they direct the resources) will not provoke pollution of the environment. Therefore, they will have to provide evidence that their activities will not harm people and the planet.
However, the third global connection is quite ambiguous. In particular, some researchers believe that this project can be concluded to China’s desire to strengthen its position in the global economy and establish a new global financial order (Sekine, 2015). It is interesting that the formation of a new bank is the result of lengthy processes. Over the past decade, China repeatedly criticized the World Bank (as well as the Asian Development Bank). According to the leadership of the country, these organizations did not provide the necessary opportunities for developing economies. Consequently, the AIIB initiative is the result of this criticism.
In this regard, it is pivotal that the US did not join the project. It can be assumed that such a position is due to America’s reluctance to lose its dominant role in Asia (Sekine, 2015). Nevertheless, by issuing loans through the new system, China will have to become more transparent. It is natural that a state, which shows growth in power, strives to take the leading position in the world. Nonetheless, the creation of the AIIB is a way to achieve it using constructive ways.
Conclusion
Thus, it can be concluded that the Asian Infrastructure Investment Bank is an initiative that offers unique possibilities for the participant countries. One of the global connections in that matter is an opportunity for countries to achieve sustainable development. In addition, the project ensures the provision of social and environmental guarantees that imply that all the activities under financing of AIIB will bear no harm to nature and people. Moreover, another global connection is linked to the fact that China will achieve transparency when attempting to establish a new financial order.
Summary (for the Presentation)
Key Points
- The Asian Infrastructure Investment Bank (AIIB) is a project organized under the initiative of China (Mishra, 2016).
- In Asia, the need for infrastructure investments is constantly growing. Investments are needed in different industry branches (in particular, in such areas as transportation, energy, and water.).
- To achieve sufficient financing, approximately 8 trillion US dollars are needed (Syadullah, 2014).
- At present, international funds are incapable of covering such expenditures.
- To obtain infrastructure investments, AIIB was initiated.
- Its goals are:
- To enhance financial cooperation in the Asia-Pacific region;
- To finance infrastructure projects of different scale in Asia.
Keywords
- The identified keywords, in terms of the AIIB initiative, are “natural resources development” and “political implications.”
- The first keyword implies the work of the bank on the development of the oil and gas (and other resources) infrastructure.
- The second keyword centers on the political implications of joining the project.
Global Connections
- The first global connection is the sustainable development of regions (Chin, 2016).
- Priority investment areas are energy, transport, water supply, and environmental protection.
- Regions will be represented in financing for development better.
- The bank will support countries in their financial growth.
- The second global connection is social and environmental guarantees (Hanlon, 2017).
- New international standards will be established.
- Financial institutions will have to provide proof that their projects do not cause contamination and do not threaten the well-being of people.
- The third global connection is the establishment of a new global financial order under the leadership of China (Sekine, 2015).
- AIIB will compete with the World Bank and the Asian Development Bank.
- USA did not join AIIB to avoid losing its position in Asia.
- When issuing loans, China will achieve transparency in all its activities, which is a constructive strategy of attaining a leadership role at the global stage.
References
Chin, G. T. (2016). Asian Infrastructure Investment Bank: Governance innovation and prospects. Global Governance, 22(1), 11-25.
Hanlon, R. J. (2017) Thinking about the Asian Infrastructure Investment Bank: Can a China-led development bank improve sustainability in Asia? Asia & the Pacific Policy Studies, 4(3), 541-554.
Mishra, R. (2016). Asian Infrastructure Investment Bank: An assessment. India Quarterly, 72(2), 163-176.
Sekine, E. (2015). Aims and prospects of the Asian Infrastructure Investment Bank proposed by China. Nomura Journal of Capital Markets, 6(4), 1-14.
Syadullah, M. (2014). Prospects of Asian Infrastructure Investment Bank. Journal of Social and Development Sciences, 5(3), 155-167.