Economy

Uplifting Sustainable Development: The integrative improvement institutes project

Published

6 years ago

November 16, 2016

[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] T [/yt_dropcap]he word “sustainable” has acquired many meanings in recent years. However, in essence, the word means “able to keep going” and it is with this meaning which it is here applied to organisations and individuals as well as to their physical, social and cultural environments.

The challenges we face in our economies and societies in our divided unsustainable world are perhaps greater than at any other time. These challenges have arisen because of how we have been trained to think, plan and act as individuals and how we have applied this training to the way we organise and govern ourselves. We have thought, planned, organised, governed and acted as though our world is comprised of parts which can be separately exploited by humans and managed by us from one stable state to another. We have forgotten we are just one species in a complex natural world. We have tended to act without a sense of wholeness – without integrity. Meeting these challenges will require new approaches to how we are trained to think, plan and act as individuals and how we are trained to organise and govern. These new approaches will need to be based on our current scientific understanding of our world and the human mind.

How we think is not how we are trained to think!

Broadly, we tend to be trained in critical thinking. In educational institutions, at work and even at home we train what may be called our Critical Mind. We train people to reason in a disembodied way as though our minds were symbol manipulators like computers, unconnected with the remainder of our bodies and our physical, social and cultural environment. We train them to break problems down into parts, to put these parts into rigid categories with shared properties and to manipulate symbols representing these categories. We train them to hypothesise using these rigid categories ( thereby excluding all other possibilities) and look for a grain of the “truth” about these categories which is imagined to be “out there” in the “real” world and to justify that “truth” with propositions expressed in words or mathematical symbols joined together in accordance with the rules of logic. We train them to think in a straight line towards a conclusion. We train them as though the way we justify our thoughts – in logical statements – is the way we think. In short, we train people to think “inside the box”. We dehumanise reasoning.

The effects of this on our lives and work include:-

• People who are predisposed to be less comfortable with manipulating symbols tend to become alienated from the better justifiers.

• As justifications become more specialised the difficulty of communicating increases and trust decreases.

• We tend to become locked into our justifications.

• We make a habit of being critical first and thinking constructively second or not at all.

• We continue doing what has worked in the past even when circumstances change.

• Critical thinking based on different, crude and rigid categorisations often leads to unresolved conflict in groups and organisations. This unresolved conflict can surface later and undermine the group or organisation as may be seen in organisations in which management does not consult meaningfully with staff.

• Similarly, as individuals we can be left with unresolved internal conflict. This can damage the individual and others and lead to poor relationships and unhappiness.

• All this unresolved conflict leads to cruelty, unhappiness and inefficiency and hinders our creativity and performance as individuals, in groups and in organisations.

• Overall, this “parts” thinking is not compatible with the thinking necessary to achieve sustainable development, as explained by Paul Weaver in “The Natural Advantage of Nations: Business Opportunities, Innovation and Governance in the 21st Century” (pp.246-253).

For instance, he states:- “In the process of breaking down real world systems into parts, most of the links and relationships that are the central concerns of sustainable development – the links between the natural and social systems or between levels in hierarchical structures or between time periods – are severed and are not studied by the specialized disciplines. Relatively new academic fields such as resilience and complex systems theory seek to address these issues by integrating the social and natural sciences.” (p.250).

Critical thinking has produced and will continue to produce much knowledge of parts of the world around us but it is inconsistent with the integrative way in which nature, our bodies, brains and minds function. There is mounting evidence in our increasingly interdependent world that in addition we need to be trained specifically in something like NEW Integrative Thinking (NEW IT) which is consistent with the integrative way nature, our bodies, brains and minds function. While continuing to train in and employ critical thinking we need also to train what may be called our Integrative Mind of which our Critical Mind is a part.

NEW Integrative Thinking (NEW IT)

NEW IT is based on extensive research in Mind Science in recent years. Mind Science draws on work from the brain sciences (which include neuroscience, immunology and endocrinology); biology; ethology; computer science; social, evolutionary and cognitive psychology; physics; anthropology; neurophilosophy (a new science established with a view to building a unified science of the mind and brain); linguistics; systems theory; complexity science including self-organisation, chaos, uncertainty, and emergence; the philosophy of mind; the philosophy of science and evolutionary epistemology (a branch of philosophy concerned with the origin, nature, methods and limits of human knowledge). Based on this work the human mind may be defined as the process of the living human brain interacting with the rest of the human body, which is interacting with its physical, social and cultural environment.

Among other things this research has shown:-

• Our mind and reasoning are inherently embodied, that is, shaped by our bodily interaction within itself and with its physical, social and cultural environment.

• Most thought is unconscious and much of our reasoning is done when we are not conscious of its being done.

• Over a lifetime of experiences we develop a number of prototypes in our minds which are reflected in patterns in our brains.

• It is difficult to change these prototypes so solving novel and complex problems in a creative way usually involves redeploying prototypes from another domain to the novel or complex domain.

• The more prototypes we have (the broader and deeper our knowledge) and the greater our ability to trigger those prototypes, the easier it is for us to creatively address novel and complex problems.

• We tend to be simplifiers because we can keep only about four items, plus or minus one, in our short-term memory while we are working on other information.

(For a concise introduction to the Mind Science which underpins my work please see the interview with leading cognitive scientist George Lakoff about his and philosopher Mark Johnson’s book “Philosophy in the Flesh” at http://www.edge.org/discourse/lakoff.html. For an annotated bibliography relating to Applied Mind Science in the field of Integrative Thinking please see NEW IT Module 1 at http:www.integrative-thinking.com.)

While encouraging and applying critical thinking when appropriate, NEW IT is a process of habitually and almost automatically making connections to create a whole new picture rather than habitually and almost automatically breaking down an old picture into its parts. NEW IT may be thought of as a more comprehensive successor to lateral thinking and using multiple intelligences but, not surprisingly, is fully integrated, not an add-on extra. It is a practical application of Mind Science so is a form of technology but it is human-based rather than machine-based technology. It is a NEW way of thinking which helps us think “outside and inside the box” and integrate the two as we plan and act.

The process of NEW IT may be thought of as our wondering (W) about a situation, creating a narrative (N) connecting our wonderings and managing our experiences (E) in acting out our narrative. It is distinctive in that it helps integrate intuition, reason and imagination. It involves understanding and learning what our basic human needs and aspects of our human will are, what guides us in balancing those needs and will, clarifying what we have and what we want to set our goal, exploring possible connections when relaxed, arriving at a strategy to negotiate the change from what we have to what we want, devising tactics to advance the strategy, taking bold, assertive and timely action to achieve our goal, reviewing and evaluating our performance.

Becoming an Effective NEW Integrative Thinker (NEW IT) Is Not Difficult

For example, the SOARA (Satisfying, Optimum, Achievable Results Ahead) Process of Integrative Thinking in NEW IT includes a comprehensive set of aids to memory to help trigger connections in our minds, help us see analogies in unrelated fields and provide a way of self monitoring our thinking and acting. All these aids to memory are joined together in a meaningful sentence so the Process as a whole can be learned in about the time it takes to learn to drive a car (about twelve hours) and is easily remembered. With practice its application can become almost automatic. At all stages of the Process provision is made for learners to record their reflections and possible actions based on those reflections. People can be introduced to the basic concepts of the Process at almost any age. The Process is culturally neutral because it accepts the uniqueness of each human being.

With practice, applying the SOARA Process of Integrative Thinking becomes a habit which empowers people and makes easier our struggle to achieve successful outcomes on a life-long journey among possibilities. It helps us refine our perceptions, expand our horizons, sense and respond successfully to emerging trends and events. By helping us to make analogies from other domains it brings out and enhances our creativity. By helping us to always consider a comprehensive range of variables it ensures we always take others into account including our “customers” and stakeholders. NEW IT helps us and our enterprises thrive.

By helping improve our creativity and performance NEW IT helps us gain a sense of meaning, a sense of belonging and a sense of personal power. This is because NEW IT helps us reconcile our needs and wants and balance and integrate our thoughts, feelings and actions in harmony with our physical, social and cultural environment. In this way NEW IT helps us to a self-reliant state of mind from which we can work towards uplifting sustainable development and the better linking of life and work.

In all contexts NEW IT provides an essential ingredient for sustainable successful connections, relationships and interactions – a common basis for communication between individuals.

Against this background, the Integrative Improvement Institutes Project directly addresses our challenges in a novel way. It is designed to improve the well-being of people and their physical, social and cultural environments through low-cost adaptive diffusion, refinement and implementation of a unique bottom-up Integrative Improvement (II) approach for uplifting sustainable development.

II emphasises dynamic connections, relationships and interactions in line with our current scientific understanding of the world as tending to be self-organising with human beings whose minds are naturally integrative. II improves in a balanced, integrative and sustainable way the lives people already have. II involves training individuals in NEW Integrative Thinking and encouraging and facilitating Integrative Governance enabled by technology in all government, business and civil society organisations. II progress is measured by a Genuine Progress Indicator (GPI).

The project is at the stage of seeking people and institutions which would like to advance Integrative Improvement in the world. In line with the adaptive tendency inherent in the Integrative Improvement approach, the current draft plan is designed to adapt as other catalysts join as one of a maximum of seven founding members of the Federation Integrators Team of the first Integrative Federation (IF) or in other roles as the project evolves. Alternatively, start-up or existing business, government and civil society organisations may like to apply the Integrative Improvement approach in their own organisations now.

The current draft project plan is as follows:-

Aim:- Improve the well-being of people and their environments through low-cost diffusion, refinement and implementation of the Integrative Improvement (II) approach for uplifting sustainable development.

Strategy:- Establish an adaptive networked Integrative Federation (IF) of largely virtual Integrative Improvement Institutes (IIIs)) in a number of countries using the training modules and templates at http://www.integrative-thinking.com and complementary tools for uplifting sustainable development.

Outline plan:- Have one IF website for teaching, research and consulting in Integrative Improvement with a page for each Institute, for each tool and for research related to NEW Integrative Thinking, Integrative Governance, Integrative Improvement, Integrative Capitalism and Integrative Democracy. A catalyst in each of 7 countries would attract and train 7 people to be the IIIs Integrators Team (IIIsIT) in their country. Each Institute would attract, train and license 7 people with experience in 7 industries to provide personal contact in 7 local areas to further diffuse Integrative Improvement and, for a fee, train successive groups of 7 people from government, business and civil society organisations based on material on the IF website. These trained people would implement Integrative Improvement in start-up and existing organisations and help in the further diffusion, refinement and implementation of Integrative Improvement in line with the model outlined here.

Tactics:- Sense and respond adaptively to other catalysts and end-users/citizens as the Integrative Improvement Institutes “virus” spreads.

Other relevant project information is as follows:-

Catalysts:- A provisional list (this and the whole project is designed to adapt as catalysts join) of the sort of catalysts needed is: a) people from a range of countries and practical settings; b) people committed enough to obtain all the modules and learn about the processes; (Money raised goes to advance the Project.) c) people with institutional bases which would lift credibility and lower overheads; d) web builder and webmaster to provide and maintain the virtual presence of the Federation and its Institutes as per the outline plan; e) facilitator for meetings – mostly virtual; f) executive secretary; g) people to seek content for and coordinate the pages on the website under the headings “Institutes”, “Tools” and “Research”. Overall, fields, interests and skills will need to cover Planning; People; Market; Product; Money; Physical, Social and Cultural Environment.

Affordability:- The basic modules offered at www.integrative-thinking.com may be purchased and learned one at a time so they should be affordable by even the smallest and poorest organisation.

However, if even the existing low prices are not affordable one copy of each module and template can be provided at whatever price an organisation certifies it can afford. Special arrangements can be made if multiple copies are required so all involved in the organisation can learn the processes and thereby acquire a common basis for communication – essential for success in any relationship or organisation. Each organisation is invited to suggest the financial arrangement that would suit it best.

Time:- The material is in easily digested small “bites” with a page at the end of each group of “bites” on which the learner records reflections and possible actions. In this way busy people can keep track of their learning. Moreover they can retain what they have learned because there are aids to memory and revision sections built-in.

Practicality:- The material is designed to be learned by each learner applying it to a problem of their own so each needs a copy of all the material to retain and refer to in future. It is designed to be accessible to people whose frontal lobes are more or less developed (mid-teens onwards) but the concepts could be taught to young children too.

Applicability:- To meet the many challenges we all face as individuals and in groups we all need integrative problem solving skills. This is what learning NEW Integrative Thinking teaches quickly, economically and permanently. Moreover, every organisation needs good governance policies. Douglas Integrative Governance 247 templates help organisations produce them quickly, economically and permanently. The potential market for a licensee would be huge as the material is applicable outside formal education channels and to people in the existing economy.

Joint venture basis:- Joint venture agreements are used to record contractual arrangements between all parties.

Uplifting sustainable development

Implementing the Integrative Improvement Institutes Project would be uplifting and sustainable for individuals because it would provide them with integrative problem solving skills to enable them to be self-reliant, innovative and reach with more confidence their full potential in the face the realities of life in general and the labour market in particular. It would be uplifting and sustainable for organisations because it would help them be adaptive in rapidly changing market conditions and assist their employees to contribute most to the organisation. It would be uplifting and sustainable for economies because all people would have an understanding of the need for and means of achieving sustainable development and economic activity would be generated by more people. It would be uplifting and sustainable for the global community as all could have a common basis for communication and problem solving.

Do you want to be involved in this uplifting project? Please contact Graham Douglas at integrative[at]optusnet.com.au

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Economy

Women’s mobility must be a key focus in urban policy

Published

5 hours ago

March 25, 2023

Auguste Tano Kouamé

Historically, cities across the world have been designed to fit the needs of able-bodied men, or a neutral, often male, user. Yet, cities are experienced differently by men and women. Women and girls find their access to employment, education, care services and even leisure is constrained when urban mobility systems and public spaces are not safe and inclusive.

Across Indian cities, studies show that concerns about commuting safely during the late evening hours or beyond a particular radius are among the biggest barriers to girls and women going to school, college and work. For instance, a 2020 study in Bengaluru showed that only 2% of women commuters surveyed made journeys after 9 pm. Barriers to mobility can thus thwart women’s long-term aspirations, eroding their financial independence and agency. The threat of sexual harassment deters women from stepping out. For instance, a 2017 study in Delhi showed that women were willing to travel for 27 minutes more each day to take a route that was perceived to be safer. It will thus be important to devise strategies to prevent and penalise sexual harassment in public spaces.

Typically, women travel shorter distances at off-peak hours, and make chained trips, frequently changing between transport modes to complete multiple tasks, balancing domestic errands and employment. Systems are, therefore, needed to collect and analyse gender-disaggregated data to understand women’s mobility patterns and design public transport services accordingly.

It was after the Mumbai Railway Vikas Corporation, working with the World Bank, conducted a detailed study of mobility patterns on suburban trains, that it identified women’s safety as a key priority and devised solutions to make platforms, stations, and trains safer for women. These activities sought to do more than just introduce women-only trains — the Ladies Specials — by addressing the fundamental design of the infrastructure to make it more women-friendly.

Hiring more female staff can make travel safer. In Kochi, for instance, 80% of the metro staff are women, working as station managers, train drivers, ticket vendors, and cleaning staff. Similar initiatives can be taken by other bus and rail agencies to enhance safety.

What’s more, since deep-rooted social norms restrict women’s movement outside their homes, local communities need to be brought on board as partners to help shift the norms around women’s mobility. A number of community-based organisations have been working across cities such as Delhi, Gurugram, and Pune to sensitise communities; they also provide gender sensitisation training for frontline public transport workers.

Under the Nirbhaya Fund, the Centre provides valuable resources to states and central ministries to implement solutions for enhancing women’s safety. Since 2015, eight cities (Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad and Lucknow) have used these funds to identify hotspots for crime, enhance police capacity for investigating crimes against women and establish one-stop centres for violence survivors.

Moving a step further, the Greater Chennai Corporation established a Gender and Policy Lab, which will support the government of Tamil Nadu in implementing projects under the Nirbhaya Fund to create safer public spaces in the city. An assessment to understand gender differences in mobility was carried out, alongside a safety audit, in Tondiarpet in north Chennai. Installation of CCTV cameras and panic buttons in city buses is also underway, with Chennai’s Metropolitan Transport Corporation establishing a command-and-control centre to monitor incidents of harassment.

Our experience in Chennai and Mumbai, and other cities globally, shows that addressing gender concerns in urban mobility and public spaces requires long-term commitment from multiple stakeholders, with solutions aimed at addressing deep-rooted issues.

Drawing lessons from international best practices and project experiences in India, the World Bank has developed a toolkit for the Indian context, which both government and private agencies can use to make cities safer and more inclusive of women.

The toolkit outlines a four-pillar approach: First, assess the ground situation to understand gender-disaggregated mobility patterns and undertake safety audits; second, strengthen policies with a focus on fare policies and grievance redressal for sexual harassment; third, build capacity and raise awareness both within government agencies and through partnerships with community-based organisations; and fourth, improve infrastructure and services with a special emphasis on women’s safety and inclusion.

Making cities safer can ensure that women and girls have choices — they can choose to stay longer in the office, go to better educational institutions, and even have a wider array of entrepreneurship opportunities — all of which will help increase female labour force participation and, in turn, boost economic performance in India.

This Opinion piece first appeared in Hindustan Times, via World Bank

Economy

The Persian Gulf-Black Sea Corridor: Why should India consider an alternative getaway?

Published

23 hours ago

March 24, 2023

Biswarup Baidya

Recently Armenian has suggested the creation of a corridor linking the Persian Gulf and the Black Sea to facilitate trade between India, Russia, and Europe. On March 3rd, 2023, a delegation of high-ranking officials and experts from Armenia proposed the idea of creating a corridor linking the Persian Gulf and the Black Sea while visiting India. This suggestion came from the visit of Armenia’s foreign minister Mr. Ararat Mizoyan to India; he has suggested the creation of an alternative trade Corridor that will operate alongside the International North-South Transport Corridor(INSTC) to establish a trade link between Mumbai and Bandarabas Seaport in Iran and then proceed to Armenia and further on to Europe or Russia. This alternative route’s main objective is to bypass Azerbaijan because Azerbaijan has closer ties with Turkey and Pakistan, so Armenia is asking for India’s support and financial assistance. India and Armenia both have a very cold relationship with Turkey and Pakistan. Historically, Turkey has been the closest ally of Azerbaijan and supports Azerbaijan in the Nagarno-Karabakh dispute. Azerbaijan also has close diplomatic relations with Pakistan, and Pakistan also supports Azerbaijan in the Karabakh dispute, and in return, Azerbaijan backed Pakistan’s narrative on the Kashmir Issue. Azerbaijan has entered into defense cooperation and shown interest in incorporating JF-17 Thunder fighter aircraft jointly developed by China and Pakistan. Periodically participated in joint military exercises bilaterally and multilaterally. Azerbaijan has repeatedly supported the Kashmir issue on Pakistan’s position and criticized the India-Armenia defense deal on PINAKA multi-barrel rocket launchers, anti-tank munitions, and a wide range of ammunitions and warlike stores worth US $250 million to the Armenian Forse. India has overtly positioned itself on Armenia’s side in the Nagorno-Karabakh conflict and has consequently opted to resist Azerbaijan and its supporter, including Pakistan and Turkey, over the Kashmir issue and Turkey’s imperial aim of establishing a pan-Turkic empire, governed from Ankara. These factors created a lack of warmth in India-Azerbaijan’s political relations. Thus, India and Armenia both the country have some sets of issues with Azerbaijan as well as Turkey. Armenia’s relationship with India has been growing steadily due to defense exports in recent times.

Historically Armenia shares strong political and business ties with Iran. Both countries share a 35-kilometer-long border that runs along the northern edge of Iran. Iran’s foreign policy towards South Caucasus is very pragmatist in the case of Armenia and Azerbaijan. The conflict between Muslim-majority Azerbaijan and Christian-majority Armenia is viewed differently by Iran, which supports Armenia rather than Shia-majority Azerbaijan. India also maintains a strong relationship with Iran. For India, Iran plays an important role in its connectivity projects to link Central Asia and Europe. India also invested in Iran’s Chabahar Port to develop a transit hub that will benefit Indian trade reaching Europe, bypassing Suez Canal. Chabahar Port holds strategic importance for India, mainly because it is the direct competition with Chinese operated Gwadar Port in Pakistan, situated in the Arabian Sea, which is an important part of China Pakistan Economic Corridor(CPEC).

Armenia is seeking Indian Investments for the corridor within Armenian territory in light of the ongoing Russia-Ukraine conflict. The Indian investment could also facilitate the development of other regional projects like the International North-South Transport Corridor (INSTC) and put India on the map of Central Asian transport with links to Europe and Russia. India’s trade with Russia has substantially increased through the INSTC, which provides a trade link between Mumbai and Russia via Iran and the Caspian Sea. Azerbaijan plays a vital role in the INSTC mainly because of its geographical location and connectivity links with Iran. However, Azerbaijan has been slow in developing infrastructure projects under INSTC.

With the ongoing cold war between Russia and the West, any large-scale cargo transit passing through the Russia Europe border looks too risky for international Logistics and Insurance companies. Armenia intends to initiate a discussion with India to explore the possibility of Indian companies’ involvement and funding of the Persian Gulf Black Sea Corridor project. Armenia doesn’t have direct access to the Black Sea, which means Goods have to be further transported to Georgia. Only then can reach Europe and Russia. Armenia recognizes the need for Indian traders to do business with Europe, so they have proposed this idea to the Indian government.

The proposed Persian Gulf Black Sea Corridor aligns with India’s objective of seeking new trade routes to Europe that avoid the Suez canal, significantly reducing transportation costs and time. This corridor which will link Iran and Georgia via Armenia also reduces the risk of sanctions for India moving to Europe from the West because of ongoing West and Russian hostility. It will boost the confidence of the Indian Treadres and will be beneficial for the Indian economy.

In this sense, the Persian Gulf-Black Sea project has a reasonable cause. However, the question is, why would Iran agree to launch a multimodal corridor through territories with proven issues when it can reach the Black Sea via Turkey? Iran and Turkey have a conflict of interest in this case. Their relations have been tense lately since Turkey informally blocks Iran from using its rail routes to reach Europe. The root of this problem is situated within between Armenia-Azerbaijan conflict. The cold relations between Iran and Turkey are one of the main reasons behind the stagnation of the INSTC. Iran is closer to cooperating with Armenia, while Turkey backs Azerbaijan. The conflict in Nagorno-Karabakh has the greatest impact on the issue. Turkey is a key stakeholder in the conflicts and empowers Azerbaijan to overcome Armenia and block the Iran-Armenia border. If Iran eliminates Turkey, then Iran only has two options to reach the Black Sea: pass through Armenia or Azerbaijan via Georgia. Georgia has existing railway and highway connections with both Armenian and Azerbaijan, and Azerbaijan has a railroad reaching the Iran-Azerbaijan border, but the problem is there is no direct Railway connection that connects Iran to the Black Sea via Armenia.

On the other hand, Iran and Azerbaijan also working on a 165-kilometer Railway section of the Rashtra-Astra line, which is missing a link to connect the Azerbaijani and Iranian Railways. The railway line will connect the city of Rasht, the capital of Gilan province, with the city of Astra, located on the border with Azerbaijan. This Railway link is part of the International North-South Transport Corridor, which aims to provide a more efficient trade route between India, Iran, the Caucasus, and Russia. Recently in January 2023, Russia and Iran agreed to fund the construction of this Missing Link. But the project completion is in question because of the ongoing cold war between Russia and the west.

For India, INSTC is more than enough to trade only with Russia, Iran, and the caucus region, but India also wants to trade with Europe to throw an alternative route and not via Suez Canal. Thus, the Armenian government is proposing to the Indian government. If India uses the Russian route to reach Europe via Iran through the Caspian Sea, then it has more chances of getting sanctioned from this Black Sea Corridor will reduce the chances of getting sanctioned by West. However, this alternative trade route involves two countries, Armenia and Georgia, which is calling for heavy infrastructure Investments. However, there can be several potential negative sites to investing in infrastructure projects in other countries, such as political and economic risks, cultural and Social Challenges, legal and Regulatory issues, Financial risks, and geopolitical risks, so it is going to be a tough call for India nevertheless opportunities are there, but nothing is risk-free. Currently, it is a proposal by the Armenian government, we have to see how the Indian government will respond.

Economy

The Role of Asian Infrastructure Investment Bank For Developing Countries

Published

2 days ago

March 23, 2023

Oksana Salabai

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that was established in 2016 with the aim of financing infrastructure projects in Asia and promoting regional economic integration.

The idea for the AIIB was first proposed by China in 2013, as a response to what it saw as a lack of representation in existing international financial institutions such as the World Bank and the International Monetary Fund (IMF). China believed that these institutions were dominated by developed countries and did not adequately address the needs of developing countries, particularly in Asia.

To address this perceived imbalance, China initiated the creation of the AIIB, which would be open to all countries in the region and would prioritize funding for infrastructure projects. The bank was formally launched in January 2016 with 57 founding members, including many Asian countries, as well as Australia, Germany, and the United Kingdom.

One of the main advantages of the AIIB’s creation is the increased availability of funding for infrastructure projects in Asia. The bank has a capital base of $100 billion, with over 90 percent of this contributed by Asian countries. This funding can be used for a variety of projects, including transport, energy, telecommunications, and water supply.

Another advantage of the AIIB is that it offers an alternative source of financing for developing countries in the region. In the past, many of these countries have relied on loans from Western-dominated institutions like the World Bank and IMF, which have been criticized for imposing strict conditions on borrowers and for promoting policies that prioritize the interests of developed countries. The AIIB, by contrast, has promised to be more flexible and to work closely with borrowers to ensure that projects are aligned with their development priorities.

AIIB creation is considered as a major power move. Its implications should be viewed through the prism of relationship between global finance and sovereign states. Moreover, power as a goal is prevalent and traditional in the strategic thinking in the policy of communities throughout East Asia[1].

China became powerful and this means it has the capacity to direct the decisions and actions of others and implement its policy [Freeman 1997]. Chinese government showed its ability to marshal necessary resources to establish China-led international organization, which was its goal because Beijing doesn’t have enough influence in the World Bank, ADB and IMF.

According to the Comprehensive National Power (综合国力) indicator, used by the Chinese government, now China is the second strongest state in the world[2]. The creation of international financial organization has always been the hegemon’s prerogative. Thus, such China’s move reflects the tendency that global balance of power is changing not in favor of the USA.

Australian scientist and representative of the English School of International Relations Hedley Bull defined international order as ‘a pattern of activity that sustains the elementary of primary goals of the society of states, or international society’ [Bull 1987]. Institutions change the global balance of power and, in turn, influence the international order. AIIB’s appearance increases China’s impact in Asia. Therefore, growing Chinese financial power is accepted as a challenge by current status quo powers as the USA and Japan – both don’t want to change the rules of the game in Asia at the moment.

Even if, from the Chinese point of view, it is supposed to be natural. Asian international order existed long time ago and was led by China. It’s obvious that Beijing has a strong sense of entitlement to be a regional leader again. It considers the contemporary Chinese presence in the international order, established after World War Two, as not adequate to current China’s elevated position in the global economy. [门洪华 2016].

The main consequences of the AIIB’s establishment for China are its increased international influence and progress in its efforts to manage domestic economic challenges. The USA and its Asian allies are disinclined to accept AIIB as one more additional puzzle to the global financial system alongside with other MDBs, that’s why they perceive it as a threat to their current geopolitical position. However, if there had been some attempts from the Obama administration to stop or slow down the establishment of the AIIB, they didn’t succeed and this was precisely articulated by Evan Feigenbaum, a former State Department official in the George W. Bush Administration: “The U.S. attempt to halt or marginalize the AIIB failed miserably”[3].

Additionally, it should be noted that AIIB’s creation led to one more economic implication – preparing grounds for possible future internationalization of Yuan[4].

China still is in the “dollar trap”: on the one hand, it has to continue buying the US Treasury securities because USD huge reserves accumulated by China are devaluating due to the quantitative easing monetary policy conducted by the Fed (The Federal Reserve System)[5]. A violent despeciation of the USD can lead to huge losses to China. On the other hand, at the moment China can’t borrow in its own currency, therefore, it is vulnerable to the balance of payment crises [Lai 2015]. Chinese currency internationalization may be a way to deal with those hurdles.

Firstly, internationalized Yuan should improve the globalization process and this intention was stated in the 14^th Five-Year Plan (2021-2025). It will hasten the trade between China and the world, reduce transactions costs and risks of cross-border exchanges, settle payments, denominate financial assets and become the reserve currency for foreign central banks. Secondly, it will give China a seigniorage – the ability to issue Yuan to other countries in exchange for real goods and to lend Chinese currency abroad at low rates. The increased international demand for Yuan for trade invoicing and settlement will keep the interest rates low. Thirdly, once Yuan is internationalized, Chinese companies will be able to borrow internationally in their own currency – this will reduce the risk of businesses’ bankruptcy amid the possible sharp depreciation of Yuan [Huang and Lynch 2013].

The economic troubles and widespread bankruptcies in Asian countries during 1997-1998 Financial Crisis were mainly caused by the currency mismatch, when the companies were unable to cover their debts issued in foreign, not domestic, currency[6].

China has been already giving loans in Yuan and using its currency for the international trade settlements, for example, partly with Russia. Beijing would like other countries to peg their currencies to Yuan. However, China sees the Yuan internationalization as a long process according to Hu Xiaolian (胡晓炼) – the Chairman of Export-Import Bank of China[7]. She stressed that Chinese currency internationalization wouldn’t be a confrontation weapon.

Nowadays AIIB provides loans in the USD, but in the near future it may lend in Yuan as well – and this will come in accordance with the national economic development blueprint.

The creation of the AIIB reflects China’s growing economic and financial power, as well as its desire to increase its influence in Asia and on the global stage. This move challenges the current status quo powers, such as the USA and Japan, who are reluctant to accept the AIIB as a new addition to the global financial system. However, the establishment of the AIIB also has economic implications, as it may pave the way for the future internationalization of the Yuan. This could help China deal with its domestic economic challenges, such as the need to borrow in its own currency and reduce its vulnerability to balance of payment crises. The internationalization of the Yuan could also improve the globalization process, give China a seigniorage, and reduce the risk of businesses’ bankruptcy. Nevertheless, Chinese officials have emphasized that the Yuan internationalization is a long process and not intended as a confrontation weapon.

The AIIB represents an important development in the international financial landscape, providing much-needed funding for infrastructure projects in Asia and offering an alternative source of financing for developing countries in the region. While concerns about the bank’s governance and China’s influence remain, the AIIB has taken steps to address these issues and has the potential to play a positive role in promoting economic development and integration in Asia.

[1] Evelyn Goh, “Great Powers and Hierarchical Order in Southeast Asia: Analyzing Regional Security Strategies”, International Security, Vol. 32, No. 3, 2008, pp. 113-157

[2] 大国兴衰与中国机遇：国家综合国力评估，海外生活，available at: https://m.juwai.com/news/225747

[3] Evan Feigenbaum, “China and the World,” Foreign Affairs, January/February 2017

[4] Wang Da, “Chinese consideration and global significance of the AIIB”, Northeast Asia Forum, No. 03, 48–64, 2015

[5] Paul Krugman, “China’s Dollar Trap”, The New York Times, 2009, available at: https://www.nytimes.com/2009/04/03/opinion/03krugman.html

[6] Peterson Institute for International Economics, available at: https://www.piie.com/publications/chapters_preview/373/2iie3608.pdf

[7] 进出口银行胡晓炼：不能把人民币国际化当成国际对抗的武器, available at: https://finance.sina.com.cn/roll/2021-06-11/doc-ikqcfnca0417359.shtml