16. Asian Infrastructure Investment Bank: Role and Implications for Emerging Asian Economies

The global financial crisis provides a number of reasons for Asia to develop infrastructure for regional connectivity, to achieve sustainable economic growth, strengthen competitiveness, create opportunities for business and reduce overdependence on the financial resources of the West. The Asian Development Bank (ADB) estimates infrastructure investment needs in the decade between 2010 and 2020 to be far more than what the World Bank or the ADB are able to finance. In this context, this chapter explores the background behind Asia creating the Asian Infrastructure Investment Bank (AIIB) and examines the infrastructure investment milieu in the Asia-Pacific Region. It puts forth the framework, purpose and functions of the AIIB along with the challenges faced with respect to the establishment of the bank in the existing global multilateral financial framework. The AIIB provides an opportunity for Asian economies that have long been under-represented in the existing global multilateral financial frameworks, to look to the bank to meet their infrastructure investment needs, provided the lending terms are competitive.