TITLE:
A New Institutional Architecture for Managing and Financing Pan-Asian Infrastructure Connectivity
AUTHORS:
Biswa Nath Bhattacharyay, Madhurima Bhattacharyay
KEYWORDS:
Asia, Connectivity, Hard and Soft Infrastructure, Public Finance, Bilateral, Regional and International Institutions, Inclusive and Sustainable Infrastructure, Infrastructure Financing, Institutional Architecture, Financial Instruments, Bilateral and Multilateral Development Banks
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.14,
October
19,
2018
ABSTRACT: Asia, particularly its major economies has
witnessed slower growth in recent years. To make Asia more economically
sustainable and resilient against external shocks to recover from the falling
growth, most regional economies need to rebalance their export-oriented (mostly
to advanced economies) production and growth towards Asian markets and regional
demand, and trade-driven growth through increased intraregional infrastructure
connectivity and regional economic integration. In 1992, a pan-Asian transport
connectivity was initiated through, Asian Highway Network and Trans-Asian
Railways Network. In 2015, an ambitious pan-Asian connectivity initiative,
namely “One Belt, One Road” (ancient silk road) initiative has been proposed.
This initiative plans to create an economic zone covering Asia, Europe and
Africa. To successfully promote and finance greater physical connectivity, at
the pan-Asian, sub-regional and national levels, Asia will require a strong and
appropriate institutional framework for effective coordination, cooperation and
collaboration among national, subregional, and region-wide institutions as well
as other stakeholders. This paper discusses the prospects and challenges facing
Asian connectivity. It also examines huge infrastructure financing needs in
Asia and ways and means to meet infrastructure financing gap in view of limited
public finance. The paper proposes Multicurrency Infrastructure Bonds (MIBs)
denominated in regional accounting units (RAUs) for financing regional
infrastructure projects together with a comparison with the European Unit of
Account (EUA) created in 1975. It also examines the nature and characteristics
of existing and new institutions and the emerging role of regional and
international institutions for enhancing Asian connectivity. Lastly, it
proposes an institutional architecture consisting of new “Asian Infrastructure
Coordination Facility (AICF)” involving major stakeholders for building a
seamless pan-Asian connectivity through bilateral, regional and international cooperation,
partnership and collaboration in infrastructure development.