Why Delay the Inevitable: Why the AIIB Matters to Canada’s Future

9 Pages Posted: 7 Apr 2015

See all articles by Eugene Beaulieu

Eugene Beaulieu

University of Calgary - Department of Economics

Wendy Dobson

University of Toronto - Rotman School of Management

Date Written: April 2, 2015

Abstract

Yesterday was the deadline to join the Asian Infrastructure Investment Bank (AIIB) as a founding member. Once again Canada is on the sidelines as Asia and most of the rest of the world moves forward while Canada watches.

When Chinese President Xi Jinping announced plans for the AIIB at the APEC summit in Indonesia in 2013 and launched the initiative in Beijing at the China-hosted APEC summit a year later, who would have predicted that such an idea would cause an international furor. The new Bank has garnered significant headlines for two reasons. One is American opposition to the China-led Bank; and two is that some see it as a rival to the World Bank and other multilateral banks. The official US position is that the AIIB is a rival to these institutions and that the funds would be better channeled through the World Bank and the Asia Development Bank.

We argue that the AIIB is a welcome Chinese initiative, in line with American calls for China to become a ‘responsible stakeholder’ in the international system. The AIIB will become a multilateral development bank that finances programs addressing huge infrastructure deficits in the Asian region. Myanmar, Cambodia, Laos, the smaller and newer members of the ten-country Association of Southeast Asian Nations (ASEAN), for example, are emerging from years of economic and political isolation to join the region’s economy. Connecting them to each other and their larger neighbours, including China and India, requires major investments to create modern transportation corridors and other infrastructure, including electronic connectivity. Infrastructure development is also integral to a shared vision of integration of the region’s economies to be an engine of global growth.

We also argue that The AIIB reflects a world where the majority of global GDP will soon be produced in Asia, and where the infrastructure needs in the region are enormous. Canada has much to offer in terms of skills and expertise in building infrastructure. For Canada it is important to look west, as well as south and east in this century. Failure to join the AIIB would be another failure to make inroads in Asia.

Keywords: AIIB, Asian Infrastructure Investment Bank, multilateral development bank

Suggested Citation

Beaulieu, Eugene and Dobson, Wendy, Why Delay the Inevitable: Why the AIIB Matters to Canada’s Future (April 2, 2015). SPP Research Paper Vol. 7, Issue 3, Rotman School of Management Working Paper No. 2590371, Available at SSRN: https://ssrn.com/abstract=2590371

Eugene Beaulieu (Contact Author)

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

Wendy Dobson

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-2451 (Phone)
N/A (Fax)

HOME PAGE: http://www.rotman.utoronto.ca/dobson/

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