Edited by Douglas H. Brooks and Jayant Menon
Chapter 4: Regional Co-operation, Governance, Soft Infrastructure and Trading Costs
Haider A. Khan1 INTRODUCTION The main purpose of this chapter is to clarify some important links between regional co-operation, (soft) infrastructure and trading costs, and to suggest some hypotheses for further investigation. Khan and Weiss (2006) discuss the issue of both hard and soft infrastructure in this context. This chapter is a continuation of Khan and Weiss (2006) but in the speciﬁc context of soft infrastructure, and particularly governance, including corporate governance. As Khan and Weiss (2006) point out, conceptually such discussions can be seen as a part of the analysis of the ‘New Regionalism’. The key idea here is co-operation through preferential trade and investment agreements that aim to strengthen structural economic reform, aid economic transformation, attract foreign investment and generally raise the international competitiveness of participating countries (IDB, 2002). In this chapter, the focus is on co-operation in various aspects of soft infrastructure (for example, social networks, legal frameworks). However, such regional co-operation in soft infrastructure will also have an impact on growth, eﬃciency and equity of hard infrastructure (for example, ports, roads, telecoms, and so on). In particular, I examine the implications of regional co-operation in soft infrastructure for trading costs within the region. It should be mentioned that, at the Asian Development Bank in particular, several other aspects of regional co-operation have also been examined. These include: 1. 2. 3. formal agreements on trade and investment (free trade agreements, investment agreements); monetary co-operation (currency swaps, exchange rate pegs, currency unions); and regional public goods...
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