AIIB shows bigger public-sector role needed in providing infrastructure

FIRST proposed back in October 2013, the China-sponsored Asian Infrastructure Investment Bank (AIIB) has rocketed into international attention of late, making headlines almost daily. But the debate has become a chiefly political one.

Yet what matters most, surely, is not only whether China has upstaged the US-led Bretton Woods family of multilateral financial institutions by boldly pushing ahead with a new development bank, and in so doing challenged the postwar economic order. What the debate arguably should focus upon is whether increased public investment in basic infrastructure is a good thing, and whether it serves to increase economic well-being. Who should provide infrastructure - the AIIB, Asian Development Bank (ADB), World Bank, etc - is a secondary issue.

The essential argument in favour of providing more and better infrastructure - be it roads, railways, ports, power and communication systems - is that it links communities and countries in a way that serves to facilitate trade, investment, economic activity and wealth creation. This much should be obvious, but in recent decades the economic elements of the infrastructure "debate" have become hostage to myriad environmental, social, governance, corruption and other concerns - slowing down project approval to the point where progress is almost stalled.