The new architects: Brazil, China, and innovation in multilateral development lending

Published date01 October 2019
Date01 October 2019
AuthorOmar Ramon Serrano Oswald
The new architects: Brazil, China, and innovation in multilateral
development lending
Omar Ramon Serrano Oswald
University of Geneva, Geneva, Switzerland
Technical University of Munich, Munich,
Omar Ramon Serrano Oswald, Universitéde
Genève, 1205 Geneva, Switzerland& TUM
Schoolof Governance, RichardWagnerStrasse
1, 80333 Munich.
Funding information
École Polytechnique Fédérale de Lausanne,
Grant/Award Number: Flash Programme,
FLASHBR 02; TUM School of Governance,
Grant/Award Number: Visiting Fellowship in
Global Transformations
Recent academic works have shed light upon the motives and negotiation dynamics
leading to the creation of the New Development Bank (NDB) and Asian Infrastructure
Investment Bank (AIIB). We know less about their daytoday activities and if (and if
so why) they are being innovative in the field of multilateral development lending.
This article evaluates novelty in the two banks. It uncovers and suggests an explana-
tion to the puzzle of why the NDB appears more innovative (in terms of institutional
design, staffing, and lending policy guidelines) than the AIIB by exploring the cases of
China and Brazil. The two countries played central roles in the setup of each the AIIB
and NDB. Drawing on extensive field research, the article proposes that their
preferences and capability to engage in institutional innovation depend on interests,
status, economic power, and regulatory capacity.
AIIB, Brazil, China, development finance, emerging powers, MDBs, NDB
It has been convincingly argued that BRICS states, namely, China,
India, Brazil, and Russia, are playing an increasingly crucial and asser-
tive role in international institutions (He & Feng, 2012; Hurrell,
2010). Although scholars have investigated the impact of the
proclaimed power transition towards rising powers on their behaviour
in longestablished institutions of global governance (e.g., Conceição
Heldt, 2015; Cooper, 2016; Ikenberry, 2009), the creation of new
institutions by emerging powers has been less systematically
addressed. In addition to becoming more vocal in global organizations,
the BRICS states (and particularly China) are actively engaged in
institutionbuilding. They have established new formal organizations
that are often portrayed as alternatives to existing international
institutions: The Asian Infrastructure Investment Bank (AIIB setup in
2015) and the New Development Bank (NDB created in 2014).
This trend indicates that these actors are moving beyond rule
making behaviour and towards fullblown institutionbuilding, which
has the potential to significantly alter the current workings of global
governance (Stephen, 2017). The creation of new multilateral develop-
ment banks (MDBs) raises questions about their potential to challenge,
or innovate, with regard to existing developmentlending practices.
This may only occur if these new institutions are inventive, rather than
replicating existing rules and practices. For this reason, this article
seeks to answer the question of
Whether, and if so, under what conditions do emerging countries cre-
ate institutions that are innovative in the field of multilateral development
Given that multilateral development lending requires complex
technical expertise, innovation is defined here as a transfer of learned
knowledge to offer better solutions that meet new requirements,
unarticulated needs (Maranville, 1992; Powell, 1998), or existing social
needs(CegarraNavarro, Reverte, GómezMelero, & Wensley, 2016,
p. 530). In this context, a key concern for countries of the Global
South has been filling large infrastructure gaps, particularly as existing
lenders have been often perceived as riskadverse, cumbersome, and
This research was supported by the Flash Research Programme of the EPFL and
aVisiting Fellowship in Global Transformations at theTUM School of Governance.
Funding by EPFL and TUM is gratefully acknowledged. The author would like to
thank Wang Lei and John Meylan for research assistance, Catherine Weaver for
helpful ideas, and the anonymous reviewers at PAD whose comments have
much improved this article. Additionally, to participants of various workshops
in Geneva, Rio de Janeiro, Shanghai, Manchester, and Munich for useful sugges-
tions. My gratitude goes in particular to the more than 40 interviewees, who
provided their time and insights and who chose to remain anonymous.
Received: 5 December 2017 Revised: 23 July 2018 Accepted: 19 August 2018
DOI: 10.1002/pad.1837
Public Admin Dev. 2019;39:203214. © 2018 John Wiley & Sons, 203

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