Financing Development Cooperation in Northeast Asia
Abstractï»¿This paper examines financing mechanisms to support infrastructure development and connectivity in Northeast Asiaâ€”comprising the Northeastern Peopleâ€™s Republic of China, Japan, the Democratic Peopleâ€™s Republic of Korea (DPRK), the Republic of Korea, Mongolia, and the Russian Far East. Although this subregion has developed the Greater Tumen Initiative, the extent of intergovernmental cooperation for cross-border infrastructure investment is not as strong as in other subregional cooperation programs in Asia, such as the Greater Mekong Subregion Program and the Central Asia Regional Economic Cooperation Program. Using various previously published estimates, this paper finds that the total infrastructure investment needs for the subregion excluding Japan and the Republic of Korea (in transport, energy, information and communication technology, and the environment) could be in the order of $63 billion per year over the next 10 years, and of this total governments in the subregion will have to mobilize external funding of $13 billion a year, focusing on national infrastructure projects in the DPRK and Mongolia and high-priority cross-border projects in Northeast Asia. The paper considers three options as a cooperative financing mechanism for the subregion : special and/or trust funds set up in the existing multilateral development banks (MDBs), a structured infrastructure investment fund supported by MDB(s), and a new subregional multilateral development bank. Then it suggests that the Northeast Asian governments may begin with setting up special and/or trust funds at the existing MDBs and move to creating an infrastructure investment fund, following the good example of the Association of Southeast Asian Nations Infrastructure Fund, once sufficient confidence and trust is built and the DPRK returns to the international community. The paper recommends against the establishment of a new development bank in the subregion.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 23392.
Date of creation: Feb 2013
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Infrastructure Development; regional cooperation; Northeast Asia; infrastructure connectivity; infrastructure investment; infrastructure fund;
Other versions of this item:
- Kawai, Masahiro, 2013. "Financing Development Cooperation in Northeast Asia," ADBI Working Papers 407, Asian Development Bank Institute.
- Masahiro Kawai, 2013. "Financing Development Cooperation in Northeast Asia," Development Economics Working Papers 23392, East Asian Bureau of Economic Research.
- F15 - International Economics - - Trade - - - Economic Integration
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-16 (All new papers)
- NEP-CIS-2013-03-16 (Confederation of Independent States)
- NEP-PPM-2013-03-16 (Project, Program & Portfolio Management)
- NEP-SEA-2013-03-16 (South East Asia)
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