GEG - Regional Governments

Why did regional multilateral development banks emerge?

Developing countries dissatisfied with:

• lending procedure 

• a scarcity of regional programs 

What did countries want instead?

An institution with less restriction, less controversy, less authority over their domestic policies

What was the first bank to fill these wishes?

• 1959: Inter-American Development Bank

  • 46 members

  • US with 1/3 of voting power 

  • China joined 2009

Name a regional banks with both regional and non-regional members

• 1966: Asian Development Bank

  • 48 regional

  • 19 non-regional

  • US & Japan as largest shareholders

  • Fund a lot of non-governmental projects

List 3 more regional banks

• 1966: African Development Bank

• 2015: Asian Infrastructure Bank

• 2024: 10 MDB’s concluded an agreement to cooperate 

What is happening to MDB funds?

They are increasing

What regional bank has caused the most debate?

Asian Infrastructure Investment Bank

When was the Asian Infrastructure Investment Bank created

• 2015 by 57 states 

Why was the Asian Infrastructure Investment Bank created?

• Because China wanted to move back Chinese investments from the US to the region

• China’s frustration at the US blocking attempts at gaining more power in the WB

• Increase credibility of Chinese investments

• Reducing bilateral tensions in the region

Who are allowed to be part of the AIIB?

• Regional & non-regional members

• Non-sovereign members (not necessarily states)

What was the purpose of the AIIB?

• Promote the ‘Silk Road Economic Belt’= corridor across Asia to overcome transport/ logistical issues through investment

  • Infrastructure investment in Asia 

What are the criticisms of the AIIB?

• China’s dominance (largest shareholder) = instrument for foreign policy

• Lack of accountability - no complaint mechanism

Has there been an attempt at a complaint mechanism?

• Yes

• Complaint Handling Mechanism

What could the AIIB be considered as?

A form of remedial multilateralism

= countries with weaker bilateral ties get more loans more often

= economically distant benefit more