Publication |August 27, 2018

South Asia’s Transport Corridors: Engines of Growth

 

Transport corridors offer enormous potential to boost South Asia’s economic growth, reduce poverty, and spur job creation—provided the new trade routes spread their benefits broadly and limit negative environmental impacts, says a new World Bank report.

The Web of Transport Corridors in South Asia—a report jointly produced by The World Bank, the Asian Development Bank (ADB), the United Kingdom’s Department for International Development (DfID), and the Japan International Cooperation Agency (JICA)—argues that the many transport corridors proposed across Asia would cost trillions of dollars to implement, far exceeding the financing resources available.

Hence, countries need to prioritize the most promising corridors that will deliver transformative impacts on economies and people—or, in the terms of the title of the report, will offer wider economic benefits. And while engineering designs and geopolitical considerations are important factors in the decision, sound economic analysis is key to designing truly successful corridors, the report notes.

“The largest economic gains from investing in transport corridors may arise from urbanization and job creation around this new infrastructure, rather than from many more vehicles using it,” said one of the report’s authors, World Bank lead economist Martin Melecky, who added: “Corridor investments involve significant tradeoffs and are not all equally successful in creating large economic surpluses that spread fairly throughout society.”

The report reviews the international experience with economic corridors, from the Pacific Ocean Belt in Japan in the 1960s to the more recent high-speed train networks in Europe. It also analyzes the impacts of the Golden Quadrilateral highway system in India and finds positive effects, including higher economic activity and better jobs for women. However, air pollution rose in parallel and gains in household consumption were not equally shared across connected districts. 

Ultimately, the ability of transport corridors to spur structural transformation along the way depends on complementary factors to improve local conditions for the new infrastructure to boost job creation and to generate tax revenues that can cover the cost of the investments.

Considering the international evidence and specific analyses for South Asia, the report advocates for a holistic design of corridor programs that actively manages tradeoffs and closes financing gaps.

The report develops a holistic appraisal methodology to ensure that economic benefits of investments in transport corridors are amplified and more widely spread, and possible negative impacts such as congestion, environmental degradation, and other unintended consequences are minimized. It focuses on South Asia—not only as one of the world’s most populous and poorest regions—but as a hinge between East Asia, Central Asia, the Middle East, and Europe.

The “web” in the title stands for both the wider economic benefits (WEB) that transport corridors are expected to generate and the complex web of transport corridors that has been proposed. The appraisal methodology introduced in this book shows how the web of interconnected elements around corridors can be disentangled and the most promising corridor proposals—the ones with the greatest wider economic benefits—can be selected.

The book is aimed at politicians, technocrats, civil society organizations, and businesses. It presents case studies of past and recent corridor initiatives, provides rigorous analysis of the literature on the spatial impact of corridors, and offers assessments of corridor investment projects supported by international development organizations.

A series of spotlights examines such issues as private sector co-investment, the impacts of corridors on small enterprises and women, and issues with implementing cross-border corridors.

Download the Full Report

Related Working Papers:

Transport Corridors and Their Wider Economic Benefits: A Critical Review of the Literature

Wider Economic Benefits of Investments in Transport Corridors and the Role of Complementary Policies

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