At 40 years of age, the Asian Development Bank (ADB) is at a turning point in its history. It must either reorientate its focus and broaden its base, particularly to give more influence to China and India, or gradually lose its relevance.
But at least the Manila-based institution has been prepared to ask some hard questions of itself.
These have come in the shape of a report by an Eminent Persons Group led by former WTO head Supachai Panitchpakdi and including former US Treasury Secretary Larry Summers and Justin Lin Yifu, of Peking University's China Centre for Economic Research.
The report assumes that the number of really poor people in Asia will continue to fall, that the continent as a whole will continue to have an overall savings surplus, and that private capital markets will continue to take over roles once performed by multilateral banks such as the ADB and World Bank.
One may believe that this is an over-optimistic view of the future, and ignores the fact that there remain very poor regions within otherwise prospering nations. Furthermore, the current ease of access to international capital markets enjoyed by most developing countries in Asia will not last.
However, there is no doubt that the report does reflect a trend that has caused many to question the bank's relevance. So the report, and other evidence, points to several areas where the bank can play a larger role even as its traditional niche of lending to individual countries diminishes.
Cross border cooperation
One is to do more in promoting Asian regional cooperation both through investment in cross border infrastructure and in promoting environmental issues, such as energy supply and carbon trading, which have cross-border impact.
Another is to assume a much needed coordinating role on trade and financial matters.
The ADB has been playing a role in developing financial cooperation between the members of the ASEAN+3 group (the 10 Association of Southeast Asian Nations members plus China, Japan and South Korea). It has sponsored the development of cross-fertilization of local bond markets as well as assisting in the Chiang Mai initiative, which sees regional central banks do currency swaps to avert a repetition of the Asian crisis.
However, there is more that could be done to improve currency and financial cooperation given both global currency volatility and the ever-growing importance of intra-regional trade.
With the right political backing, the ADB may also be able to bring order to the "noodle bowl" of bilateral and subregional trade agreements.
However, if it is to have an impact in this and other areas, the bank's traditional dominance by Japanese management, and the large role played by non-Asian members – from the US to Norway – must change. The non-Japanese Asian members need more sense of ownership of the bank.
It is always difficult for multilateral institutions to change ownership and voting rights to reflect changes in economic weight. But the bigger and richer developing Asian countries could advance their own claims to more influence if they contributed more to the Asian Development Fund, the soft lending arm of the ADB. The ADF badly needs more funding if the Millennium Development Goals of poverty reduction in Asia are to be reached.
Another obstacle to ADB development is the potential rivalry for influence between Japan and China. India also wants a bigger say, though its economic linkages to East and Southeast Asia are still modest and South Asia as whole has made scant progress in regional cooperation.
Any real or perceived battle of wills is made more complicated by the sheer geographical scope of the ADB. Membership spreads from Armenia in the west to Pacific microstates like Tuvalu in the east, and includes central Asian states such as Kazakhstan which are also members of the European Bank for Reconstruction and Development.
However, by the same token the ADB does provide China, Korea and other successful Asian countries with a means of expanding their trade and influence into areas traditionally dominated by western or Russian influence.
Ultimately, the ADB could become a test case for whether Asian economic cooperation is more than rhetoric.