Evaluation of Recent Development of the AIIB: The 2nd Annual Meeting of the AIIB Held in Korea and Its Implications

Abstract

The 2nd AIIB Annual Meeting was held in the Republic of Korea as an international forum to evaluate the operations of the AIIB and discuss short and long-term strategies and challenges. At the Meeting, the AIIB emphasized the keyword "Lean (efficient)" in its business operations, presenting the core principles of its short- to long-term strategy as "Lean (efficient), Clean (ethical) and Green (environment-friendly)" operations. The AIIB is expected to respond to new global challenges by constructing infrastructures, while aligning its operations with the core principles of a lean, clean and green organization, thus aiming to develop into a new type of MDB appropriate for the 21st century. However, in order to develop into such a 21st century MDB model, the AIIB will have to overcome many difficulties. First, the AIIB needs to handle the internal capability problem. Second, the AIIB should overcome the profitability problem. Third, there are the institutional limitations. Fourth, it will be important to control the potential conflict breaking out between member states. Fifth, there is the issue of China's influence. The question of how China exercises its influence will be a measure of AIIB's progress toward a truly international cooperation body. The AIIB is also expected to hold discussions on how to upgrade the existing Bretton Woods system as China-led international financial institutions such as the AIIB, NDB and Silk Road Fund continue to grow. In line with the development of the AIIB, Korea should develop a new infrastructure model that incorporates new global issues such as the 4th industrial revolution, climate change, the digital economy, and sustainable development, proactively present this to the AIIB and encourage the participation of Korean companies in these business projects. In addition, based on its experience with successfully leading infrastructure investments in the past, Korea needs to actively develop infrastructure development projects that contribute to inclusive growth, such as projects that contribute to regional balanced growth, high-quality job creation, and social integration in Asian developing countries. It would also be possible for Korean local governments to utilize their networks of exchange and cooperation with cities and regions in Asian developing countries to jointly develop local infrastructures in these countries.