Landlockedness Infrastructure And Trade New Estimates For Central Asian Countries

Abstract: This paper assesses the impact of internal infrastructure and landlockedness on Central Asian trade using a panel gravity equation estimated on a large sample of countries (167 countries over 1992-2004). The panel structure of the dataset makes it possible to control for country-pair specific effects (as opposed to the usual importer and exporter effects) that would otherwise be captured by the coefficients of time-invariant variables such as distance or landlockness. Our findings highlight the need to pursue a dual policy agenda. First, transit corridors are regional public goods and should be managed as such through international cooperation. International Financial Institutions can -and do- play a key role in this regard through assistance, coordination and policy dialogue. Second, the Central Asian countries should actively seek diversification of their transit corridors to prevent the creation or maintenance of monopoly positions in transit and bottleneck points such as trans-shipment platforms.

This paper assesses the impact of internal infrastructure and landlockedness on Central Asian trade using a panel gravity equation estimated on a large sample of countries (167 countries over 1992-2004). The panel structure of the dataset makes it possible to control for country-pair specific effects (as opposed to the usual importer and exporter effects) that would otherwise be captured by the coefficients of time-invariant variables such as distance or landlockness. Our findings highlight the need to pursue a dual policy agenda. First, transit corridors are regional public goods and should be managed as such through international cooperation. International Financial Institutions can - and do - play a key role in this regard through assistance, coordination and policy dialogue. Second, the Central Asian countries should actively seek diversification of their transit corridors to prevent the creation or maintenance of monopoly positions in transit and bottleneck points such as trans-shipment platforms.

A large proportion of the least developed countries are landlocked and their access to world markets depends on the availability of a trade corridor and transit systems. Based on empirical evidence from World Bank projects and assessments in Africa, Central Asia, and elsewhere, this paper proposes a microeconomic quantitative description of logistics costs. The paper theoretically and empirically highlights that landlocked economies are primarily affected not only by a high cost of freight services but also by the high degree of unpredictability in transportation time. The main sources of costs are not only physical constraints but widespread rent activities and severe flaws in the implementation of the transit systems, which prevent the emergence of reliable logistics services. The business and donor community should push toward implementation of comprehensive facilitation strategies, primarily at the national level, and the design of robust and resilient transport and transit regimes. A better understanding of the political economy of transit and a review of the implementation successes and failures in this area are needed.

The Modern Silk Route is offering a potential land-bridge between China and Europe through Central Asia and Russia that offers a complement to existing shipping routes, and is attracting growing interest by a selected number of multinational companies. However, the main role of the Silk Route is to support the development and integration of the region. Connectivity to the east and west, over exceptionally long distances, is critical to the development of the Central Asian countries, when trading globally and between themselves. Facilitating trade and transportation across many borders, remains a major challenge more than twenty years since the breakup of the former Soviet Union.The book revisits trade and transport connectivity through the Central Asia countries along the old Silk Route, based on knowledge from project implementation and field research. It takes the modern perspective of supply chain efficiency and logistics performance, which depends not only on infrastructure but also markets and policies. Since the breakup of the Former Soviet Union connectivity of Central Asia is a prominent agenda. The focus has been on physical improvements of specific transport corridors. But logistics performance remains very low, caused by inefficiencies, at national levels, of services and of trade and transport agencies, as well as lack of cross-border integration of trade and transit.The book suggests that the policy focus should not be just on physical trade routes. Rather, it stresses the focus on supply chain reliability, and proposes policy packages and enabling implementation practices, consistent across countries in the region in areas such as transportation, customs and border clearance, trade or transit. It also highlights the complementarity of the current initiatives, including the recent development of the Eurasian Customs Union, or the rising of trade and investment from China.

The Modern Silk Route is critical to the development and integration of Central Asian countries. The book argues that to overcome current supply chain inefficiencies the traditional focus on physical corridors needs to be complemented by a consistent and ambitious set of national reforms in trade and transport facilitation.

This book analyses and draws policy implications from infrastructure's central role in lowering Asia's trade costs. Infrastructure is shown to be a cost-effective means of lowering trade costs and thereby promoting regional growth and integration. This book combines thematic and country studies, while breaking new ground in quantifying infrastructure's impact on Asia's trade costs. The contributors examine empirical estimates of Asia's trade costs and infrastructure's influence on those costs while also contributing to a better understanding of the region's logistics challenges. The book includes interesting case studies of rapid growth and congestion (in PRC), inland transportation challenges (India), port competition in an archipelago (Indonesia) and transportation modal switching as value-added rises (Malaysia) that are policy- and project-relevant in their own right. The analysis and policy implications in this book will be of interest to trade and infrastructure policy-makers and academics at graduate and higher levels involved in economic development or Asian studies, as well as the broader development community.

This study examines major challenges and issues associated with developing regional infrastructure through the fostering of regional cooperation in Asia, and provides a framework for pan-Asian infrastructure cooperation. The study's long-term vision is the creation of a seamless Asia (an integrated region connected by world-class, environmentally friendly infrastructure) in terms of both "hard" (physical) and "soft" (facilitating) infrastructure. The soft part supports the development and operation of the hard component. Findings indicate that the benefits of upgrading and extending Asia's infrastructure networks are substantial, and that all countries in the region would benefit. A logistics network is only as good as its weakest link; each country in a regional supply chain gains from infrastructure improvements made in others. Improving connectivity in the region would bring Asia large welfare gains through increased market access, reduced trade costs, and more efficient energy production and use. According to the study, to achieve this Asia needs to invest approximately $8 trillion in overall national infrastructure between 2010 and 2020. In addition, Asia needs to spend approximately $290 billion on specific regional infrastructure projects in transport and energy that are already in the pipeline

This open access book features various studies on democratization, transformation, socio-economic development, and security issues in the Organization for Security and Cooperation in Europe (OSCE) geographical region and beyond. Written by experts and scholars working in the field of human dimension, security, transformation and development in Europe and Asia, particularly in post-soviet and communist countries, it examines the connectivity that the OSCE provides between the East and the West. The 2021 edition of this Compilation Series of the OSCE Academy presents studies on peace and conflict as well as political regime development in various member states of the OSCE as well as their economic, security and human rights performance and the challenges countries and society face currently. The OSCE is working in promoting Human Rights and Democratization under the notion of Human Dimension of ODIHR and is enhancing securitization and development policies in Eurasia, Europe, Central Asia and North America since 1991. 2021 marks the 30th anniversary on the tremendous efforts in promoting democracy, security and development. This compilation reviews some of these efforts in light of this anniversary, the achievements and shortcomings.

"What effect does distance have on costs for economies at different locations? Exports and imports of final and intermediate goods bear transport costs that increase with distance. Production and trade depend on factor endowments and factor intensities as well as on distance and the transport intensities of different goods"--Cover.