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Financing Development Cooperation in Northeast Asia

Author

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  • Masahiro Kawai

    (Asian Development Bank Institute (ADBI))

Abstract

This paper examines financing mechanisms to support infrastructure development and connectivity in Northeast Asia—comprising the Northeastern People’s Republic of China, Japan, the Democratic People’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.

Suggested Citation

  • Masahiro Kawai, 2013. "Financing Development Cooperation in Northeast Asia," Finance Working Papers 23392, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:financ:23392
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    References listed on IDEAS

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    1. Biswa Nath Bhattacharyay & Masahiro Kawai & Rajat M. Nag (ed.), 2012. "Infrastructure for Asian Connectivity," Books, Edward Elgar Publishing, number 14819, June.
    2. Biswa Nath Bhattacharyay, 2012. "Estimating demand for infrastructure, 2010–2020," Chapters,in: Infrastructure for Asian Connectivity, chapter 2, pages 19-79 Edward Elgar Publishing.
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    Cited by:

    1. Wihtol, Robert, 2014. "Whither Multilateral Development Finance?," ADBI Working Papers 491, Asian Development Bank Institute.

    More about this item

    Keywords

    Infrastructure Development; regional cooperation; Northeast Asia; infrastructure connectivity; infrastructure investment; infrastructure fund;

    JEL classification:

    • 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, Innovation, 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

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