Geographical Simulation Analysis

Satoru Kumagai and Ikumo Isono
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Satoru Kumagai: IDE-JETRO

Chapter 7 in The Comprehensive Asia Development Plan (CADP) 3.0: Towards an Integrated, Innovative, Inclusive, and Sustainable Economy, pp 212-233 from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: The Economic Research Institute for ASEAN and East Asia (ERIA), in collaboration with the Institute of Developing Economies of the Japan External Trade Organization (IDEJETRO), has conducted an economic impact analysis of infrastructure improvements and institutional reforms in the Association of Southeast Asian Nations (ASEAN) and neighbouring countries for the Comprehensive Asian Development Plan (CADP) (ERIA, 2010) and CADP 2.0 (ERIA, 2015). This chapter uses the latest IDE/ERIA-Geographical Simulation Model (IDE/ERIA-GSM) to provide economic impact analyses on infrastructure improvements and institutional reforms for the CADP 3.0. The two major changes in the situation in ASEAN and East Asia are as follows. The first is the relative decline in importance of new physical interregional transportation infrastructure projects. In 2010 and 2015, a number of toll roads and other important infrastructure projects connecting major cities needed to be developed as soon as possible. As a result of the progress made in the construction of these motorways with regard to densely populated areas, infrastructure projects connecting cities have become less of a priority. At the same time, unlike when the CADP and CADP 2.0 were being developed, the number of remaining intercity toll road infrastructure projects with a significant impact on a country’s economy is decreasing. The policy interest in transportation infrastructure projects has been shifting to urban transportation, rural infrastructure, and the expansion of existing infrastructure. In addition, many infrastructure projects that are not economically feasible remain in place, and some of them have been designated regional priority projects. New projects such as high-speed rail have been proposed, but progress has been slow due to the huge construction costs. A rapid expansion of the high-speed rail network, as seen in China, has not occurred in ASEAN or in other countries. ASEAN Member States (AMS) are at varying levels of development, with some countries still urgently needing to improve their core transport infrastructure to link cities and towns. On the other hand, countries that are nearing completion of their core transport infrastructure need to tackle more difficult challenges to reap additional economic benefits, such as the effective deployment of information and communication technology (ICT) infrastructure and the introduction of new technologies to save energy. The second is the coronavirus disease (COVID-19). How COVID-19 will change the shape of economic activity is not yet certain at the time of writing, but some trends can already be observed. There will be a decline in cross-country tourism and business travel opportunities, with some business travel being replaced by ICT-enabled teleconferences. As the airline industry has fallen on hard times, airfares have become more expensive, and the shift from relatively expensive air freight transport to cheaper land transport may become a long-term trend in the future. This chapter is based on awareness of these issues. We build scenarios and run simulations. The scenarios include infrastructure in the CADP 3.0; the deployment of ICTs, especially 5G-enabled services; and progress in energy conservation. An overview of the IDE/ERIA-GSM and the differences between the latest IDE/ERIA-GSM and the versions used in the CADP/CADP 2.0 are presented in section 2. The scenarios and results are discussed in section 3. Conclusions are given in section 4.

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