Configuring the Asian Infrastructure Investment Bank: Power, Interests and Status by Ian Tsung-Yen Chen

Author:Ian Tsung-Yen Chen [Chen, Ian Tsung-Yen]
Language: eng
Format: epub
Tags: International Relations, Trade & Tariffs, Banks & Banking, Finance, Political Science, World, Business & Economics, Asian, General
ISBN: 9780429789519
Google: cd8JEAAAQBAJ
Goodreads: 54209553
Publisher: Routledge
Published: 2020-12-29T00:00:00+00:00

India: participation and restraint

India is an emerging global power hungry for inward investment in its infrastructure. Although the level of India’s physical and social infrastructure tops that of other South Asian developing countries, it still lags behind its fellow BRICS (Brazil, Russia, India, China, South Africa). Where it is most lacking is in access to electric power, internet access, level of air travel and quality of seaports. The elimination of poverty and access to health care, education and vocational training are also pressing items on the national agenda (Agrawal, 2015). According to the Global Competitiveness Report, India’s overall infrastructure performance ranked 68th out the 138 countries or economies surveyed (Schwab, 2016). Although its transportation facilities, especially rail, outperform many developing economies, it only ranks 88th in terms of electric power supply, putting it in the 36th percentile. The situation is even worse in rural areas. Instead of the construction or upgrading of basic transportation networks, efficient, reliable and affordable electricity supplies are critical to the country’s economic growth (Allcott, Collard-Wexler, & O’Connell, 2016). To sustain economic momentum, India is seeking to build closer connections with both the East and the West. Improving air, land and sea connectivity to the East is expected to generate trade and investment opportunities. Integration with countries to the west will open up more business opportunities and ensure a supply of oil from the Middle East across the Arabian Sea for this energy-hungry country. In 2018, India’s top four oil suppliers were in the Middle East (Abdi, 2018). The structure of India’s external trade relations demonstrates the importance of improving regional connectivity. According to official data, most of India’s top trading partners are in East Asia or the Middle East.3 Improving linkages with these regional countries is India’s main challenge.

This major regional and global power had the world’s second largest population (1.31 billion) and was its seventh largest economy in 2018.4 Since 1990, China and India have been considered to be the two most promising emerging powers in Asia. They were numbered among the BRICS by Goldman Sachs for their outstanding economic growth (O’Neill, 2011). At the beginning of the 1990s, India’s GDP rivaled China’s GDP, both of which were around US$350 billion (in current US$). Due to its smaller population, India had a higher GDP per capita in the early 1990s. Since the mid-1990s, however, China’s GDP has rapidly surpassed that of India, making it the world’s second largest economy, producing five times more than India both in total and per capita. In terms of military spending, India spent a little more than China, although both countries spent about US$10 billion. Since then, the gap has widened rapidly. In 2018, China spent US$250 billion on its military, 3.76 times more than India.5 If one accepts that a state’s national power includes both economic scale and military power, the power gap between China and India has widened between the 1990s and the 2010s. Faced with China’s ever-increasing dominance in the region and Beijing’s geopolitical and geo-economic expansion, some Indian scholars took the attitude that “if you can’t beat them, join them.

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