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The second and third chapters, acknowledging the differences between the Baltic Sea Region and Asia, spell out key lessons from the Baltic Sea Regional experience, which are applicable in the context of Asian regions. Chapter 2 shows how Baltic Sea Region economies quickly revived the economic mystique of the Eurasian medieval silk roads, the trading union of the ‘Hanse’, with their cooperative bottom-up and consensual regional development institutions. These resurrected institutions successfully leveraged the regional drivers of productivity growth. Productivity growth was accompanied by increased economic inclusiveness (cohesion) in the region through, among others, institutional twinning programs for human capital accumulation.
Chapter 3, taking into account field interactions in the Greater Mekong Subregion and in Central Asia Regional Economic Cooperation economies, demonstrates a need for policy and knowledge tools in Asia which can drive regions successfully into the ecology of clusters and economic corridors: (a) via agglomeration economies; (b) via increase in value-added share in and along regional and global value chains; and (c) via structure transformation into higher skill industries and services.
Mustafizur Rahman, Khondaker Golam Moazzem, Mehruna Islam Chowdhury and Farzana Sehrin
This chapter identifies cross-border initiatives with Bangladesh’s involvement particularly at the bilateral, subregional and regional levels. Some of these initiatives are also integrated with Asia-wide broader connectivity particularly through the Asian Highway and Trans Asian Railway initiatives. Ongoing initiatives include construction and upgrading of multi-lane highways and railways, road and rail bridges, procurement of locomotives and wagons, and construction of internal container river ports. A consensus among the concerned countries is needed with regard to standard operating procedures, harmonization of standards and customs procedures, and service charges and user fees for transit facilities. Additionally, significant investment will be required for trade facilitation and to upgrade border trade facilities at land ports, inland waterways and sea ports. The chapter identifies five key areas where concrete action from major stakeholders is required: (1) mobilizing the necessary funds for building physical infrastructure; (2) identifying and sequencing of priorities; (3) cross-border coordination; (4) building human resources to manage cross-border mega projects; and (5) building supply-side capacities to benefit from connectivity-driven regional market opportunities.
Infrastructure for Integrating South and Southeast Asia
Edited by Michael G. Plummer, Peter J. Morgan and Ganeshan Wignaraja
Ganeshan Wignaraja, Peter J. Morgan, Michael G. Plummer and Fan Zhai
This chapter estimates the potential gains from South Asian–Southeast Asian economic integration using an advanced computable general equilibrium (CGE) model. It estimates the potential gains to be large, particularly for South Asia, assuming that the policy- and infrastructure-related variables that increase trade costs are reduced via economic cooperation and investment in connectivity. As Myanmar is a key inter-regional bridge and has recently launched ambitious, outward-oriented policy reforms, the prospects for making progress in these areas are strong. If the two regions succeed in dropping inter-regional tariffs, reducing non-tariff barriers by 50 percent, and decreasing South Asian–Southeast Asian trade costs by 15 percent – which this chapter suggests is ambitious but attainable – welfare in South Asia and Southeast Asia would rise by 8.9 percent and 6.4 percent of gross domestic product, respectively, by 2030 relative to the baseline. These gains would be driven by rising exports and competitiveness, particularly for South Asia, whose exports would rise by two-thirds (64 percent relative to the baseline). Hence, the chapter concludes that improvements in connectivity would justify a high level of investment. Moreover, it supports a two-track approach to integration in South Asia, that is, deepening intra-regional cooperation together with building links to Southeast Asia.
Edited by Michael G. Plummer, Peter J. Morgan and Ganeshan Wignaraja
Moe Thuzar, Rahul Mishra, Francis Hutchinson, Tin Maung Maung Than and Termsak Chalermpalanupap
With closer regional integration there is increasing interest within the Association of Southeast Asian Nations (ASEAN) and on the part of the ASEAN’s dialogue partners in the potential gains of closer connections between Southeast Asia and South Asia. The strategic positions of India, Myanmar and Thailand provide the basis and scope for implementing multi-modal connectivity projects, for building upon and improving existing infrastructure and processes for cross-border connectivity in trade. With outward-looking policies in the various subregions that seek to link their economies closer than ever, the ASEAN and South Asian countries are presented with a wide array of options at the bilateral, subregional and regional levels that can be pursued in partnership under the different frameworks for cooperation. The role of regional entities such as the Asian Development Bank is also important to consider. This chapter assesses the political economy and other implications of cross-border connectivity between South and Southeast Asia, and suggests practicable options for moving forward.
This chapter describes India’s trade and investment relations with Southeast Asia and its policies to increase integration. India’s regional integration with Southeast Asia has been advancing well and several projects are being implemented currently. India’s regional connectivity with Southeast Asia has been evolving on two pillars: Northeast India for multimodal and intermodal operations and Southern India for multimodal operation. It presents India’s broad proposals on connectivity projects with Southeast Asia and policy recommendations to strengthen connectivity in Asia in general and that between ASEAN and India in particular. Enhancing connectivity between South and Southeast Asia is a multifaceted task that will require the implementation of strong policy initiatives. Development of the Southeast Asia and South Asia connectivity would throw up significant opportunities to industrial development in India and its trade potential with South and East Asian countries.
Investment in infrastructure for increasing trade and connectivity in South Asia and South East Asia has been impacted by reduction in commercial bank participation in project financing, which has made the role of multilateral financial institutions and export credit agencies significant. The financing model needs to change to a more sustainable local market and local currency financing by harnessing the domestic savings for financing its infrastructure and connectivity projects. This chapter analyzes the means and constraints in funding cross-border connectivity projects. Using the most recent data from sources including the World Bank, the ADB and other financing and research institutions, barriers to financing cross-border projects have been explored and analyzed with the help of case studies. The research brings to the fore the potential benefits of regional funding platforms and role of multilaterals in resolving such barriers.