ISLAMABAD – $60 billion China Pakistan Economic Corridor (CPEC) offersenormous potential for Pakistan to boost its economy, reduce poverty,spread benefits widely and help those likely to be affected by the newtrade route, a new report says.
The report, entitled “The Web of Transport Corridors in South Asia”,published by the Asian Development Bank, the United Kingdom’s Departmentfor International Development, the Japan International Cooperation Agency,and the World Bank, discusses several economic corridors including CPEC.
“The largest economic gains from investing in transport corridors may arisefrom urbanization and job creation around this new infrastructure, ratherthan from many more vehicles using it”, said one of the report’s authors,World Bank economist Martin Melecky, who added: “not all corridorinvestments are equally successful in creating large economic surplusesthat spread fairly throughout society.”
The report notes that the many transport corridors proposed across Asiawould cost trillions of dollars to implement, far exceeding the financingresources available. Hence, countries need to prioritize the most promisingcorridors that will deliver the expected transformative impacts for theireconomies and people. Engineering designs and geopolitical considerationscould be important, but sound economic analysis is the key to designingtruly successful corridors, the report argues.
The ability of large-scale transport investments to generate wider economicbenefits depends on the population density in the areas they cross. Theircapacity to spur structural transformation along the way depends oncomplementary factors around the transport corridors, such as the skills ofthe local population or restrictions on local land use. The new transportinfrastructure must come with the means for people to take advantage of theimproved connectivity right from the start.
“The upcoming Khyber Pass Economic Corridor project is a positive example,where trade facilitation and the development of local economic activitiesare explicitly integrated in the design of the project”, said IllangoPatchamuthu, World Bank Country Director for Pakistan.
The report reviews the international experience with economic corridors,from the Pacific Ocean Belt in Japan in the 1960s to high-speed trainnetworks in Europe more recently. It also analyzes the impacts of theGolden Quadrilateral highway system in India and finds positive effects,including higher economic activity and better (non-farm) jobs for women.However, air pollution rose in parallel and gains in household consumptionwere not equally shared across connected districts. Appraisal simulationsfor CPEC and the Kolkata-Dhaka corridor suggest that complementary measuresare needed to improve local conditions that in turn will create formal jobsand generate tax revenues that could pay for corridor investments.