CPEC emerging as game changer for Pakistan: World Bank Economist
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WASHINGTON: A World Bank economist, who co-authored a report prepared jointly by international donor agencies, has said that China Pakistan Economic Corridor (CPEC) is among those rare projects of its kind which will create large economic surpluses and will have positive impact all across the society.
“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 Martin Melecky, the World Bank economist, adding that not all Corridor investments were equally successful in creating “large economic surpluses that spread fairly throughout society”.
The ADB report titled “The Web of Transport Corridors in South Asia” noted that the $60 CPEC, which has huge investment in road, railways and ports, offers enormous potential for the country to boost its economy, reduce poverty, spread benefits widely and help those likely to be affected by the new trade route.
The report was published by the Asian Development Bank, the United Kingdom’s Department for International Development, the Japan International Cooperation Agency, and the World Bank, and discusses several economic corridors including CPEC.
The report drew a comparison with CEPC and many other transport corridors being implemented across Asia which, it added, would cost trillions of dollars to implement, far exceeding the financing resources available.
The joint report reviews the international experience with economic corridors, from the Pacific Ocean Belt in Japan in the 1960s to high-speed train networks in Europe more recently.
The countries undertaking these projects would need to prioritize the most promising corridors that will deliver the expected transformative impacts for their economies and people. Engineering designs and geopolitical considerations could be important, but sound economic analysis is the key to designing truly successful corridors, the report argues.
According to the report, the ability of large-scale transport investments to generate wider economic benefits depends on the population density in the areas they cross. Their capacity to spur structural transformation along the way depends on complementary factors around the transport corridors, such as the skills of the local population or restrictions on local land use.
The new transport infrastructure must come with the means for people to take advantage of the improved connectivity right from the start, it said.
The World Bank Country Director for Pakistan noted that the upcoming Khyber Pass Economic Corridor project was a positive example, where trade facilitation and the development of local economic activities were explicitly integrated in the design of the project.
The joint report also analyzes the impacts of the Golden 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 consumption were not equally shared across connected districts, it noted.
Appraisal simulations for CPEC and the Kolkata-Dhaka corridor suggest that complementary measures are needed to improve local conditions that in turn will create formal jobs and generate tax revenues that could pay for corridor investments.
In light of the international evidence and specific analyses for South Asia, the report advocates for a more comprehensive design of corridor programs that actively manages tradeoffs and closes potential financing gaps in a sustainable manner. - APP
