New Development Bank

Definition

The New Development Bank (NDB) is a multilateral development bank established by the BRICS nations (Brazil, Russia, India, China, and South Africa) in 2014 to support public or private projects through loans, guarantees, equity participation, and other financial instruments. The NDB aims to foster greater financial cooperation among emerging economies and has become a significant player in international development financing, enhancing China's role in globalization and international trade.

5 Must Know Facts For Your Next Test

1. The New Development Bank was officially launched at the sixth BRICS summit held in Fortaleza, Brazil, in July 2014.
2. The initial authorized capital of the NDB was set at $100 billion, with each member country contributing equally to its resources.
3. The NDB focuses on funding sustainable development projects in infrastructure and sustainable development sectors across BRICS countries and other developing nations.
4. The bank also emphasizes the importance of green financing and sustainable practices in the projects it supports.
5. By providing an alternative to Western-dominated financial institutions like the World Bank and IMF, the NDB aims to create a more balanced global economic order.

Review Questions

• How does the New Development Bank enhance financial cooperation among emerging economies?
  • The New Development Bank enhances financial cooperation among emerging economies by providing a platform for these countries to pool resources and fund infrastructure projects that are critical for their growth. By focusing on sustainable development and offering flexible financing options, the NDB empowers member countries to address their unique developmental challenges while fostering collaboration on regional projects. This collective approach helps reduce dependence on traditional Western financial institutions.
• Discuss the significance of the NDB's focus on green financing within the context of global environmental challenges.
  • The NDB's focus on green financing is significant because it aligns with global efforts to combat climate change and promote sustainable development. By prioritizing projects that contribute to environmental sustainability, such as renewable energy initiatives and eco-friendly infrastructure, the bank not only addresses pressing environmental challenges but also encourages member countries to adopt greener practices. This commitment positions the NDB as a leader in promoting sustainable economic growth while addressing climate issues.
• Evaluate the impact of the New Development Bank on China's position within the international financial system and its role in globalization.
  • The New Development Bank significantly impacts China's position within the international financial system by allowing it to assert greater influence over development financing, particularly among emerging economies. By playing a central role in the establishment and operation of the NDB, China enhances its leadership status among BRICS nations and showcases its commitment to alternative models of development financing. This shift contributes to China's broader strategy of promoting globalization that emphasizes cooperation among developing countries rather than relying solely on Western-dominated institutions.

Related terms

BRICS: An acronym for Brazil, Russia, India, China, and South Africa, a group of five major emerging economies that collaborate on various political and economic initiatives.

Asian Infrastructure Investment Bank (AIIB): A regional multilateral development bank established in 2015 to support the building of infrastructure in the Asia-Pacific region, heavily backed by China.

Globalization: The process by which businesses or other organizations develop international influence or operate on an international scale, often leading to increased trade and economic integration.