Asian Infrastructure Investment Bank Research Articles

Bangladesh and New Development Bank (NDB): Accession and after, money and more

AbstractThis article examines Bangladesh's new membership in the BRICS‐led New Development Bank (NDB), as the Bangladesh country study for the Special Section on ‘The Evolution of New Development Bank: A Decade Plus in the Making’, in Global Policy journal. In September 2021, Bangladesh became the first country outside of the original BRICS founding members to join NDB. The analysis details how Bangladesh went about joining NDB, especially the geopolitics and diplomacy between Bangladesh and the key NDB founding members (India, China, Russia) which supported Bangladesh's entry; why Bangladesh joined NDB, the main motivations or interests; and how NDB membership is turning out for Bangladesh after acceding to the Bank, what are Bangladesh and the Bank actually doing together, are they realizing the main opportunities as intended, or are outcomes not as intended. Throughout the analysis, we assess how Bangladesh's membership in NDB compares to its multi‐decade memberships in the World Bank, Asian Development Bank (ADB), Islamic Development, and its newer relations with the other new China‐supported multilateral bank, Asian Infrastructure Investment Bank (AIIB). This study combines primary data gathered from field research, primary desk research, and cross‐verification with the related data, and secondary sources.

The Belt and Road Initiative and export variety: 1996–2019

This study examines the association between the Belt and Road Initiative (BRI) and export variety (EV). We propose three hypotheses on how BRI may foster export markets (destinations) or export product lines. The estimates are based on a dataset constructed specifically for this analysis, covering 183 countries and linked with trade data from 1996 to 2019. We apply the instrumental variable (IV) approach in regressions for covering the endogeneity. The results indicate that participation in BRI is negatively related to EV. Specifically, we find evidence that, on average, BRI participants have less EV (by product and by destination) and greater export concentration. As regards participation in the Asian Infrastructure Investment Bank and BRI meanwhile (AIIB_BRI and AIIB_MOU), the results show a more negative effect. And there are heterogeneous effects of BRI across different economies and sectors.

What explains the recovery speed of financial markets from banking crises?

Less is studied about the determinants of the impact of banking crises on the recovery speed of financial markets. In this paper, based on the members from Asian Infrastructure Investment Bank (AIIB), we measure the recovery speed of financial markets from banking crises by financial stress index (FSI). Then the Kaplan-Meier (K-M) survival analysis methodology is applied to depict the stylized features of the recovery speed of financial markets. Further, the Cox proportional hazards model is introduced to investigate the effect of a variety of influencing factors on the recovery speed of financial markets from banking crises. The results indicate that certain factors, such as stationary macroeconomic environment, sound government finance, stable exchange rate regime, moderately open financial market, global financial market with high panic prior to banking crises, and expansionary monetary policy with the price rule after banking crises, contribute to fast recovery of financial markets.

AIIB Investment and Economic Development of India: The Case of the Gujarat Road Project

The purpose of this study is to verify whether the transportation infrastructure investment carried out by the Asian Infrastructure Investment Bank (AIIB) has promoted the economic development of its recipient countries. Since the establishment of the AIIB, its investments in infrastructure development, aimed at promoting economic growth in Asian developing countries, have garnered considerable attention. This study selects India, the largest recipient country of the AIIB, as the research object and chooses the Gujarat Road Project as the research case, since it is a completed infrastructure construction investment project in the transportation field. This paper provides an overview of the project’s operation and summarizes key factors in the project’s implementation. In the data analysis section, the per capita GDP is selected as the explained variable to measure economic development, and the LASSO regression method is used to select several variables that affect economic development. Moreover, the random forest model is used to obtain the causal relationship between road construction and the per capita GDP from 2001 to 2022. The results indicate that road construction in India has a significant positive effect on per capita GDP growth, the Gujarat Road Project supported by the AIIB also has a positive effect on per capita GDP growth, and this effect is stronger than that at the national level. The main contribution of this work is the validation of the investment strategy of the AIIB and the quantification of the economic contribution of AIIB investment projects to the local area.

Implementation of the power generation program by the Asian Infrastructure Investment Bank (AIIB) to improve the economy in Bangladesh

This article examines the effectiveness of programs carried out by the Asian Infrastructure Investment Bank (AIIB) in encouraging economic investment and infrastructure connectivity in Asia. Specifically, the author will analyze AIIB assistance in Bangladesh in the electrical energy sector. AIIB is a multinational development bank initiated by China to encourage infrastructure in Asia. In terms of long-term funding for infrastructure sub-projects such as sub-projects in the areas of power production, ICT, cross-regional transportation, etc., AIIB has emerged as one of the most important development partners for Bangladesh. This paper aims to answer how effective the implementation of the electricity sector program by AIIB is in improving the economy in Bangladesh. To examine this topic, the author refers to Development theory and the concept of Global Governance. The results of the author's analysis show that most of the assistance provided by AIIB in Bangladesh focuses on the electrical energy sector, this is a response to the electricity crisis which is hampering the Bangladesh economy. The results of implementing the program are considered quite effective because it succeeded in distributing electricity evenly in villages and encouraging development renewable and low-carbon electrical energy infrastructure. However, this program can also be considered less effective because it has not been able to encourage Bangladesh to maximize its own natural resources to guarantee its electricity supply due to the low share of the renewable energy market in Bangladesh's electricity.

Manufacturing consensus: China’s strategic narratives and geoeconomic competition in Asia

China’s attempt to build geopolitical influence through economic instruments has become a critical facet of US-China competition. How can rising powers convince follower states to join alternative (geoeconomic) initiatives created and/or led by the rising powers, in the shadow of potential rebuke from the hegemon? This article theorizes how rising powers can use strategic narratives to ameliorate the follower states’ concerns of antagonizing the hegemon for aligning with alternative initiatives. We argue that rising powers can control the narrative through “two-front narration”: simultaneously telling the hegemon that they seek limited changes, while telling follower states that they do not have to worry about crossfire because the rising powers-hegemon relations are non-zero-sum. By sending the right messages to different audiences to induce motivated reasoning, rising powers can manufacture the appearance of consensus among multiple audiences to help follower states hedge, while blunting the formation of containment coalitions. We adopt a mixed-methods approach to substantiate our theory: (1) text analysis of China’s messaging about the Trans-Pacific Partnership (TPP) from 2008 to 2016; (2) case study of the rhetorical action-reactions between China, the United States, and the follower states on the relationship between the TPP and the Regional Comprehensive Economic Partnership; and (3) parallel case study of the rhetorical action-reactions between China, the United States, and the follower states on the relationship between the Asian Infrastructure Investment Bank and multilateral development banks such as the World Bank. Our analysis has implications for theories of strategic narratives in international politics and debates about geoeconomic competition/hedging in Asia.

Rhetorical coercion, institutional legitimacy and the creation of the Asian Infrastructure Investment Bank

AbstractThis article centres around one singular yet substantively important empirical puzzle: why did the United States fail to delegitimate the Asian Infrastructure Investment Bank? I argue that a crucial factor missing from existing analyses is China's rhetorical coercion. To substantiate this argument, I first reconstruct from the perspective of framing the US‐China rhetorical contestation over the AIIB at the early stage. This results in the identification of seven competing frames pertaining to the purpose and procedural legitimacy of the bank: Sub‐standard, Tool and Rival promoted by the United States; High‐quality, Equality, Complement and Welcome Change by China. To flesh out China's rhetorical coercion, I gauge the coercive power of the frames identified before zooming in on Complement and Welcome Change and uncovering therein three coercive claims: shortfalls in Asia's infrastructure finance, weaknesses in the existing system of international financial institutions and inconsistency in the US approach to the AIIB and China's rise. These claims considerably restricted the room for the United States to engage in principled opposition, and in tandem with developments favourable to the AIIB (not least the participation of Western countries), enabled China to rhetorically coerce the United States.

Orta Asya’da Çin’in Ekonomik Varlığı: Kazakistan Örneği

Since the dissolution of the Soviet Union, China has significantly increased its economic presence in Central Asia thanks to leading Chinese institutions such as the Shanghai Cooperation Organization (SCO), the Belt & Road Initiative (BRI), and the Asian Infrastructure Investment Bank AIIB. Now on the course, China is one of the most significant partners for Central Asian states. China has opened up to private business and foreign investment. State-owned banks turned saving into financing infrastructure facilities such as roads and rail links. Foreign firms were asked to set up alongside a local partner, encouraging to transfer of technology. For decades, as a result, China's economy has grown. This paper will focus on Kazakhstan as a case country in Central Asia. Diplomatic ties between Astana and Beijing developed shortly after the collapse of the former Soviet Union, with both countries moving on to co-found the Shanghai five, which later turned into the SCO. From Kazakhstan's point of view, the country's geopolitical situation leaves it no choice but to cooperate with Russia and China, Kazakhstan's two most potent and closest neighbors. Currently, Kazakhstan's strategy provides the path to China's economic outreach, while Beijing's growing investments provide Kazakhstan's path to modernization. Kazakhstan and China have extended their diplomatic ties since 1991, and since the launch of the BRI in 2013, they even furthered their economic relations are thriving. Financial integration is vital to supporting the BRI; therefore, the AIIB was established. Along with the significant growing economic influence, two main challenges require feasible solutions one is the Russian reaction to China's growing economic presence, and the other is the anti-Chinese sentiment that causes demonstrations in Kazakhstan.

China’s Economic Initiatives and their Impact on Environmental Governance of Global Infrastructure Projects

The Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank (AIIB) have raised concerns among critics about their potential negative impact on global environmental governance. These China-led initiatives may lower the environmental and social safeguard standards of their infrastructure investments abroad to outcompete other international financial institutions (IFIs) like the Asian Development Bank (ADB) and the World Bank. This could trigger a race to the bottom in the global infrastructure investment market. The study found that while the BRI may have a significant influence on the norms and standards of development finance, the AIIB has only had limited impact. The market has become more concentrated rather than intensified competition. The ADB's standards have not been affected, but the World Bank may have been negatively impacted and reduced its project-level environmental safeguards. The negative impact extends beyond BRI countries to other countries. The most concerning finding relates to the substantial global investments in coal power projects under the BRI. To improve global sustainability, China and developed countries must collaborate to provide cleaner and more affordable infrastructure investment to developing countries.

Belt and Road Initiative: Case Studies from Sri Lanka, Nepal and Thailand

The Belt and Road Initiative (BRI) has proved controversial amongst some members of the international development consultant community. Whilst the concerns are no doubt genuinely held, the questions that need to be answered are: What are the issues of concern? Are they unique to the BRI, or do they apply to all International Financial Institutions (IFIs)? Developing countries desperately need funds to achieve the 17 Sustainable Development Goals. They largely depend on International Financial Institutions (IFIs) such as the World Bank Group, Asian Development Bank, European Bank for Reconstruction and Development, and Asian Infrastructure Investment Bank. In addition, grants and loans can be provided by individual donor countries. Despite the number of IFIs, funds are limited, especially for major projects such as ports and airports. Examples from Sri Lanka, Nepal, and Thailand are provided to discuss the issues surrounding BRI projects in these jurisdictions. The most benefits to the country will come with the maximum level of involvement of all levels of society in the project. Nonetheless, China has made some miss-steps along the way. Keywords: BRI, Belt and Road Initiative, International Financial Institutions, international development, infrastructure

Informal governance and China’s influence in the Asian Infrastructure Investment Bank

This article develops a theoretical framework on the conditions and mechanisms of informal governance in international organizations by a major power. It argues that the condition for informal governance is that the major power has favourable outside options, i.e. the alternatives that bring about considerable gains in the absence of cooperation, while other countries do not. When conditions are not in place, the major power is unable to exert informal influence. Based on the theoretical lens of the conditions and mechanisms of informal governance by major powers in international organizations, this article assesses China’s influence in the Asian Infrastructure Investment Bank (AIIB). It finds that China’s influence in the AIIB does not remain static. In the early years after the establishment of the AIIB, China was not in a position to exercise informal governance and did not demonstrate influence beyond the confines of the AIIB’s formal rules. As the situation of outside options for European countries worsening and as China’s outside options improving, China became well placed to implement informal governance. Under such circumstances, China’s preferences are well reflected in the AIIB’s decision-making.

Multilateral Development Banks as Agents of Connectivity: the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB)

The article explores connectivity from the prism of multilateral development banks. It recognises that theorising on connectivity is increasing, but as connectivity agency is less addressed, it aims to contribute to discussions on who the agents of connectivity are and how they contribute thereto. By analysing the Asian Development Bank (ADB) and the Asian Infrastructure Bank (AIIB) respectively, the article sets forth a three-dimensional agency: strategic, developmental and financial. This is in line with the multi-layered nature of the banks, which reflects the broader member states and key state interests. Next to their role as banks, they contribute to the understanding of development, in addition to which they represent key shareholder interests. The banks are both to be seen as nodes of connectivity and as active agents in realising connectivity for others.

The impact of Asian Infrastructure Investment Bank on OFDI: evidence from China

ABSTRACT This study empirically explores the impact of the Asian Infrastructure Investment Bank (AIIB) on outward foreign direct investment (OFDI). Based on data of Chinese cross-border investments during 2007–2020 obtained from the Bureau van Dijk (BvD) Zephyr database, we use a multi-period difference-in-differences estimation strategy to identify the construction of the AIIB throughout the period of 2014–2020. The results reveal that the establishment of the AIIB increases the possibility of China’s OFDI by an average of 15.45%; furthermore, the number of China’s OFDI projects arises by 20.40% and the amount of China’s OFDI flows boosts by 23.04% on average. Moreover, the heterogeneity analyses show that the AIIB prompts more OFDI flows to countries with higher economic developments, especially those technology- and export-oriented ones.

A Partnership Centered on Norm Adoption

Abstract This article investigates the institutional collaboration between the Asian Infrastructure Investment Bank (AIIB) and the European Bank of Reconstruction and Development (EBRD) on the Dushanbe-Uzbekistan Border Road Improvement Project in Tajikistan. It argues that AIIB’s adoption of the EBRD’s environmental and social safeguard norms and project management norms facilitates the provision of infrastructure-related public goods in Tajikistan in three ways. First, the harmonization between the governance norms of these two banks facilitates their cofinancing which fills the financing gap of the project. Second, the policy coherence enables the two institutions to implement environmental and social safeguard norms that the Tajikistan government is unable to fully practice. Third, it paves the way for the transfer of project management experience from the EBRD to AIIB. Through this learning process, AIIB is able to provide additional infrastructure-related public goods in Tajikistan by acting as an independent provider of project monitoring services.

New Multilateral Development Banks and Green Lending: Approaching Scalar Complexities in the Global South

ABSTRACTNewly established multilateral development banks promote green finance and support a green transition in the global South. This article examines the new multilateral development banks using a dynamic view and documents the projects and lending preferences of New Development Bank (NDB) in Brazil and Asian Infrastructure Investment Bank (AIIB) in Turkey. While AIIB and NDB have made it easier for global South actors to access infrastructural investment funding and are committed to expanding green lending, their commitment rests on the use of country systems and national financial intermediaries. This results in extending loans for projects with significant risk and ignoring the broader connections of the projects to the environmentally hazardous strategies of capital accumulation. Despite their strong green discourse, their design and the way their mandates have been interpreted render new multilateral development banks prone to business as usual.

Exploring the Role of International Organizations in the Development of Developing Countries, A Case Study of Vietnam

Vietnam is considered an important emerging economy in Southeast Asia. After its domestic reform in 1986 (Doi Moi), it continuously deepened its integration into the world economy and achieved great economic development. This paper takes neoliberalism and neorealism as theoretical approaches to analyze two international organizations, the World Trade Organization (WTO) and the Asian Infrastructure Investment Bank (AIIB). Specifically, the analysis focuses on how International Organizations (IOs) affect the course of development in Vietnam. This study aims to provide some references for Vietnam's future economic development and how to seek further development in international organizations. This study finds that by joining WTO, Vietnam achieved remarkable economic growth through trade liberalization. Most importantly, Vietnam gained the ability to negotiate problems on an equal basis with developed countries through the dispute settlement mechanism provided by WTO. The AIIB, on the other hand, gives Vietnam good access to infrastructure loans, but it also raises concerns about Vietnam's balance of power and security in the region. Due to the complexity of the impact of IOs on Vietnam's development, Vietnam needs to optimize its economic structure and relevant institutions rationally and make decisions to balance diverse interests to achieve long-term development and better face possible external crises. Further studies could be conducted on how Vietnam and other developing countries could balance their interests and promote development within IOs.

Using COVID-19 as opportunity: the role of the AIIB’s leadership in its strategic adaptation to the pandemic

The COVID-19 pandemic led to a steep rise in demand for COVID-recovery lending and a decrease in capacity for infrastructure borrowing in many countries struggling to cope with its economic effects. This has presented a significant challenge to the Asian Infrastructure Investment Bank (AIIB), as its project pipelines had been developed mainly for traditional infrastructure lending. This paper examines the strategies employed by the AIIB to adapt to the COVID-19 pandemic. The findings showcase how its institutional leadership effectively employed its authority, resources, and leadership competences to push for an adaptive response strategy. This was achieved by pitching a response based on the expansion of the AIIB’s operational scope beyond traditional heavy infrastructure lending and the introduction of new policy instruments for funding COVID-recovery projects. The AIIB also engaged in collaborative partnerships with other MDBs to access their project pipelines and expertise. Thanks to these efforts, the AIIB not only managed to cope with the challenge, but its leadership also ensured the institution would come out of the pandemic having opportunistically benefited from it. The findings speak to the scholarship on IO resilience and bureaucratic politics. The analysis relies on official documents and original data from 20 interviews with IO officials and experts.

The Impact of China's AIIB on the World Bank

AbstractThe World Bank, under the stewardship of the United States, stands out as the global leader among international development organizations. Does China's establishment of the Asian Infrastructure Investment Bank (AIIB) undermine this status? Examining this question, we focus on the borrowing practices of a special set of countries: the founding members of the AIIB. These founders openly defied the public preference of the United States, arguably to create a potential rival to the World Bank. Using a new causal inference method, Pang, Liu, and Xu's Dynamic Multilevel Latent Factor Model—as well as several well-known estimation models as robustness checks—we document at least a temporary decrease in the number of World Bank infrastructure projects that the developing AIIB founders have entered into. This study presents the first systematic evidence that China's AIIB could unsettle the political influence the United States has enjoyed over developing countries through its leadership of the World Bank. An important set of countries may be parting ways with the World Bank and looking to a Chinese institution for leadership in the world of development.

Joining the Multilateral Development Banks or Not? Evidence from the Asian Infrastructure Investment Bank: How Does it Stimulate Countries' Economic Growth

Joining the Multilateral Development Banks or Not? Evidence from the Asian Infrastructure Investment Bank: How Does it Stimulate Countries' Economic Growth

The Asian Infrastructure Investment Bank: A Complement or a Substitute for The Asian Development Bank?

The Asian Infrastructure Investment Bank: A Complement or a Substitute for The Asian Development Bank?