Far East of Eden: Determinants of Membership in the Asian Infrastructure Investment Bank

Abstract

What factors shape the membership of international institutions? Using a combination of Comparative Politics and International Relations approaches, this thesis explores the various determinants that led countries to either join or not join China’s Asian Infrastructure Investment Bank (AIIB), which began operations in January 2016. While political scientists have long debated why exactly nations create multilateral institutions, this thesis instead focuses on the understudied but pivotal question of membership, which will only grow more central as the development regime complex continues to deepen. Since the bank’s infancy, the AIIB’s membership has proved to be a contentious and convoluted issue. Both the U.S. and Japan, which lead the rival World Bank and Asian Development Bank (ADB), not only elected to abstain but also cast aspersions on the bank’s governance and lending standards; China’s AIIB, however, has attracted a global following, including many longtime U.S. allies. This thesis contends that, under some base set of domestic political conditions, nations elected to pursue (or not to pursue) AIIB membership according to geopolitical or economic interest. Whereas states that consider themselves Chinese competitors or enjoy privileged positions in competing institutions tended to prioritize geopolitical concerns that encourage non-membership, others primarily evaluated institutional membership in terms of economic and financial interest, given that some baseline of regulatory standards is satisfied. The paired case studies reveal that for developed countries in Western Europe, the bank signified a chance to build real commercial partnership with Asia and to have a hand in shaping the bank’s governance and regulatory standards. For developing countries in Central and Southeast Asia and the Middle East, the bank presented a tremendous opportunity, not only to rebuild their crumbling infrastructure but also to forge new connectivity in a region that has for too long been fragmented by borders. In this way, institutional membership is not determined by a single factor which would trump all others. Instead, it is characterized by a complex interplay among competing and common interests, which reflect differences in geography, domestic politics, institutional clout, and economic ties