Regional Economic Impacts of Trans-Caspian Infrastructure Improvement: Implications for the Post-COVID-19 Era

Xinmeng Li, Kailai Wang and Zhenhua Chen
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Xinmeng Li: Asian Development Bank Institute
Kailai Wang: Asian Development Bank Institute
Zhenhua Chen: Asian Development Bank Institute

No 1274, ADBI Working Papers from Asian Development Bank Institute

Abstract: With the implementation of the Belt and Road Initiative (BRI) in the People’s Republic of China (PRC), the Trans-Caspian International Transport Route (TITR) has received increasing attention. The corridor connects the PRC and Europe via Central Asian countries. Hence, it plays an important role in facilitating international trade through its transportation infrastructure network systems. As the corridor is opening up substantial economic opportunities for transit countries, it is becoming essential to have a proper understanding of the economic impact of potential transportation infrastructure investment on these countries along the TITR corridor. We conduct a regional economic impact assessment of transportation infrastructure investment to fill this research gap, using a computable general equilibrium analysis. To capture the uncertainty of infrastructure investment given the influence of COVID-19, we evaluated different impacts of the shocks, such as different modes of freight transportation (including rail, road, sea, and air), types of trade (exporting and importing), and levels of investor confidence. The results show that infrastructure investment has heterogeneous multiplier effects on the regional economy (due to the differences in infrastructure quality and country endowment). The impacts of infrastructure investment primarily result from the promotion of exports, and the impacts vary substantially by mode. Overall, we suggest that, although TITR countries are facing investment uncertainty due to the influence of COVID-19, strengthening infrastructure investment can be a useful tool to stimulate the economy while reducing the negative impact of the epidemic.

Keywords: Trans-Caspian International Transport Route; transportation infrastructure; trade cost; computable general equilibrium (search for similar items in EconPapers)
JEL-codes: F16 H54 J60 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2021-07
New Economics Papers: this item is included in nep-int, nep-ore, nep-tra and nep-ure
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