While World Bank and IMF were set up in the US, the ADB came up in Manila while the AIIB is located in Beijing
One of the key pillars of developmental planning should be an insight from the history of ideas. The power of ideas to shape reality and the power of reality to generate ideas needs to be appreciated. A clarification may help.
We live in an era where investments are a key domain of effort. Everyone is trying to draw or generate investment. In the real world, what is actually short is land and water. The philosopher will draw attention to virtual organisations. However ‘virtuosity’ goes only so far (the pun is entirely unintended!).
Human race and life also needs material assets and aids in abundant measure and, therefore, one needs land for manufacturing and services. Water is a universal pre-requite anywhere!
The investors pay a lot of attention and perhaps rightly so to how the price of petrol is going up or down and how it will affect the financial institutions. This approach cannot be grudged.
However, beyond investments is the institutional framework of financial operations. Indeed, the commercial/intermediary financial institutions such as the banks have their own role.
Perhaps even more definitely came the global organisations which seek to maintain global monetary stability or improved living standards. For obvious reasons, we cannot overlook the need to build welfare institutions to take care of human needs.
The World Bank was founded in 1944 with its headquarters in Washington, DC, with a membership of 188 countries and commitments of $60 billion as of June 2016.
The International Monetary Fund was also founded in 1944 in Washington and it also has 188 countries as members. The Asian Development Bank was founded in 1966 in Manila with a membership of 67 countries. Being closer to the World Development Bank, the ADB focused on schools, health clinics, energy entities and the like. In 2014, it had a financing of $23 billion. In this stream of agencies, the US influence was clear.
However, as would be expected, sooner than later alternate streams of thoughts were bound to emerge. One of them which got into prominence was Islamic banking. From Malaysia west-wards in many Muslim-dominated countries, this acquired prominence. Interestingly more non-Muslims in Malaysia are today buying Islamic financial products and services then Muslims.
In many parts of South East Asia Islamic banking and finance have fast become a viable alternative to traditional banking. This is also true in West Asia. Preliminary figures show that Islamic finance assets in 2014 could have surpassed two trillion dollars. The story does not end here.
Many would have heard of the developments of 2013 where in Bali (Indonesia) the philosophy of the Chinese lead Asian Infrastructure Investment Bank was first spelt out by Chinese President Xi Jinping. Today with a membership of 57 nations and a committed capital of $100 billion, Britain, Germany, Australia and South Korea have signed up for this bank. Whether this was a rebuff to the US or not is a moot point.
Quite understandably people leading their nations felt that their national interests should be fine-tuned also to the emerging global order. It may be worth mentioning that in November 2015 itself, the Renminbi had joined the Dollar, the Euro, the Pound and the Yen as a global reserve currency. Of course, the Dollar remained at the centre but the periphery was also acquiring status. This has done a huge deal of good to China’s extending sphere of economic and political influence, while the rules of the game change.
Zheng Xin li, a dominant figure in the Asian Infrastructure Investment bank, is credited with an Asian view to many concerns of development. Illustratively, he saw parallels between the developments and spatial spread of remote villages along the Mekong river in laos. He felt that economically this region was complementary to China.
This fitted in well Xi’s nationalist strategy. It is here that people like Jin acquired significance. A former chairman of China Sovereign Wealth Fund (with a passion for Shakespeare) Jin symbolised a gross truth of institutions, irrespective of ideological divide and political color, institutions grow around people. That is another story.
Meanwhile, the typology of developmental banks across the world is no longer monotonously of the same breed.