AIIB is recharging globalization

The emergence of the Asian Infrastructure Investment Bank has had two major global implications. The first is in terms of additional availability of finance for regional infrastructure development. Traditional financial institutions such as the International Monetary Fund, World Bank, Asian Development Bank and the African Development Bank have been funding multiple development projects in many countries.

The AIIB complements the existing avenues of multilateral project finance by creating a corpus of funds specifically for infrastructure development. Infrastructure is the most important economic need of most countries, particularly those in Asia. The significance of the AIIB for Asia in this respect is easily understood.

The second major implication of the AIIB is a re-ordering of the global balance of power around itself. Developed countries of the West have traditionally dominated global financial institutions like the IMF and World Bank. And large emerging market economies such as China, India and Brazil have been unhappy with the traditional financial institutions because their roles in the decision-making of the IMF and World Bank are small compared with the current sizes of their economies.