Using COVID-19 as opportunity: the role of the AIIB’s leadership in its strategic adaptation to the pandemic

Abstract

The COVID-19 pandemic led to a steep rise in demand for COVID-recovery lending and a decrease in capacity for infrastructure borrowing in many countries struggling to cope with its economic effects. This has presented a significant challenge to the Asian Infrastructure Investment Bank (AIIB), as its project pipelines had been developed mainly for traditional infrastructure lending. This paper examines the strategies employed by the AIIB to adapt to the COVID-19 pandemic. The findings showcase how its institutional leadership effectively employed its authority, resources, and leadership competences to push for an adaptive response strategy. This was achieved by pitching a response based on the expansion of the AIIB’s operational scope beyond traditional heavy infrastructure lending and the introduction of new policy instruments for funding COVID-recovery projects. The AIIB also engaged in collaborative partnerships with other MDBs to access their project pipelines and expertise. Thanks to these efforts, the AIIB not only managed to cope with the challenge, but its leadership also ensured the institution would come out of the pandemic having opportunistically benefited from it. The findings speak to the scholarship on IO resilience and bureaucratic politics. The analysis relies on official documents and original data from 20 interviews with IO officials and experts.