ADBI series on Asian Economic Integration and Cooperation
Edited by Douglas H. Brooks and Jayant Menon
Douglas H. Brooks and Jayant Menon The remarkable growth of developing Asia in recent decades owes much to the expansion of its international trade, including intra-regional trade. Exports even played a critical role in the region’s recovery from the 1997–98 ﬁnancial crisis. The region’s trade expansion has in turn been facilitated and encouraged by the development of supporting infrastructure, including both physical (hard) and institutional (soft) infrastructure. Investment in infrastructure has been complemented, and spurred, by foreign and domestic investment in productive capacity as well as by structural reforms that improve the environment for investment, production and trade. There are clear signs of a resurgence of interest in infrastructure among developing countries and particularly in developing Asia, where trade has been expanding most rapidly. Inadequate infrastructure can cost an economy signiﬁcant unrealized gains from trade. Imagine what Singapore would be like without its port facilities, airports or communications links to the outside world. What would the economy of Azerbaijan or Kazakhstan be like without the infrastructure for developing and exporting hydrocarbon resources? On the other hand, imagine what Mongolia would be like with widespread satellite communications, sewage and sanitation facilities, ample well-maintained roads, health-care facilities, and suﬀicient electrical power to generate greater export earnings and increase domestic living standards. Infrastructure in many Asian countries is ineﬀicient, if not inadequate. Inability to transport goods and people eﬀiciently or an inadequate power supply to operate machines leads to microeconomic as well as macroeconomic bottlenecks. Infrastructure can also...
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