AIIB Tipping point for sustainable infrastructure
By Kim Dong-yeon
The 19th century economist Thomas Robert Malthus penned a gloomy future for mankind in his work, “An Essay on the Principles of Population.” Here, he forecast a future where the exponential growth of the human population would exceed the linear growth of food production, resulting in worldwide famine and poverty.
With the unexpected technological progress, however, his prediction proved to be profoundly misguided. The growth of food production surpassed that of the population. What he totally missed was the everlasting technical development and increasing productivity.
Today, more than two centuries later, a skeptical outlook on the global economy still exists, although to a lesser extent than Malthus’ prediction. Rapid economic developments have led to environmental destruction and widening income disparities. These negative impacts may ultimately lead to an economic collapse. But could there be something we have overlooked in making these pessimistic forecasts? Just as Malthus failed to take into consideration technological progress, perhaps we have also neglected the importance of a critical variable - sustainable development. With sustainable development in the picture, the future looks more promising. Sustainable development is the key to nurturing an ecosystem that develops in harmony with economic, social and environmental values.
The second annual meeting of the Asian Infrastructure Investment Bank (AIIB) will be held on Jeju Island for three days from June 16 to 18. The theme of this meeting is “Sustainable Infrastructure.” In history, investments in infrastructure did drive economic growth during this time. But investment decisions that were purely based on economic cost and benefits have resulted in numerous unintended and negative side effects.
With global warming, abnormal climate conditions have been observed around the world; inequality has deepened among regions and across income classes. Now, time calls for a change in deciding infrastructure investments. We must take into account the social and environmental values of infrastructure. Sustainable infrastructure will lay a solid foundation for sustainable development.
Recently, sustainable development has caught the attention of the international community. In September of 2015, the United Nations has set “sustainable development goals” as its medium-term development agenda for the humanities. And development projects by the World Bank and other multilateral development banks began to address the necessity of sustainability. The AIIB, a new international organization that was formed last year, is also taking part in this global trend. Adopting sustainable development as the core strategy of the bank seems very timely. In particular, considering that the Asian infrastructure market makes up the biggest share of the global market at 32 percent, and the demand for new infrastructure in the region will be $38 trillion by 2030, AIIB must play an especially significant role in the international community.
The world is already undergoing a drastic transformation, also known as the Fourth Industrial Revolution. While the previous industrial revolutions overlooked their social and environmental impacts, the Fourth Industrial Revolution must unfold with a focus on sustainable development. This is why the upcoming AIIB’s annual meeting serves an important purpose at this critical juncture. This yearly gathering will be attended by over 2,000 participants including finance ministers, governors of central banks, and other policymakers from 77 member countries, as well as representatives from international organizations and from financial and business sectors. This is also the first time for the AIIB to hold its annual meeting outside its headquarters.
I look forward to a productive meeting that will foster valuable discussions on sustainable infrastructure. I hope that the meeting will serve as a tipping point for the Fourth Industrial Revolution.
Kim Dong-yeon is deputy prime minister and minister of strategy and finance.