WASHINGTON: A World Bank economist, who co-authored a report prepared jointly by international donor agencies, on Friday said that China Pakistan Economic Corridor (CPEC) was among those rare projects that would create large economic surpluses and would have a positive impact all across the society.
“The largest economic gains from investing in transport corridors may arise from urbanisation 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 Asian Development Bank (ADB) report titled “The Web of Transport Corridors in South Asia” noted that the CPEC, under which huge investments in roads, railways and ports were made, offered 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 ADB, 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 draws a comparison with the 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.
The countries undertaking these projects would need to prioritise the most promising corridors that would deliver the expected transformative impacts for their economies and people. Engineering designs and geopolitical considerations could be important, but sound economic analysis was 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 depended 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 into the design of the project.
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 manage tradeoffs and closes potential financing gaps in a sustainable manner.