Fiftieth Year of ADB

In gradual decline of its power, one may realize it sounding like a name of idol group. Asian Development Bank, or ADB, cerebrates the fiftieth anniversary this year. The Japanese have been proud of ADB as an international organization under strong leadership of Japan. Now, the status of ADB is challenged by Asian Infrastructure Investment Bank led by China. While its impact on Asian economy is still greater than AIIB, ADB considers how to integrate monetary policy for development of Asian nations. It reminds of a fact that Japan is no longer the biggest economy in Asia.

ADB was established with thirty-one countries and regions in 1966, including United States and Japan as main sponsors. All of nine Presidents for these fifty years were the Japanese, making the bank an only international monetary organization led by Japan. After the World War II, Japan argued that Asian nations needed a monetary organization with low-rate loan for developing countries, hoping Asian countries to improve the image of Japan.

Although Tokyo lost to Manila in the election of the city for headquarters, actual investment or technological support was done under the leadership of Japan. The bank firstly supported agriculture, followed by industrial investment for building roads or bridges. In Asian monetary crisis in 1997, the bank for the first time made emergency investment to Thai or South Korea. It promoted a policy for currency integration to ACU, which was dismissed by firm opposition of China and South Korea.

In a remarkable growth of Chinese economic power, ADB cannot ignore two-year old AIIB. All the countries in ADB except Japan and U.S. also participate in AIIB. Total amount of the lending of ADB in 2016 was $17.5 billion, ten times greater than that of AIIB. However, annual demand for infrastructure in Asian region is $1.7 trillion. It is obvious that ADB cannot satisfy that demand by itself.

The main topic of ADB annual meeting in Yokohama, Japan, was how to raise the monetary contribution to the developing nations in Asia. “Enhancing quality of infrastructure in terms of lifecycle cost and environmental and social consideration is important,” told Japanese Minister of Finance, Taro Aso, pledging $40 million to ADB for promoting high-level technology. But, it is not enough.

President of ADB, Takehiko Nakao, announced in the meeting a possibility of cooperating with One Belt One Road initiative, which was a development policy led by China. Chinese Finance Minister, Xiao Jie, hoped ADB to strengthen strategic ties with the initiative. It is rather a problem for ADB that U.S. Donald Trump administration is basically cool on international organization. ADB is not in a situation to regain power in Asian economy.