News
Economic corridors: Key to sustainable growth
Summary
Mint takes a closer look at the idea and the benefit it offers
Economic corridors are back in the news after the announcement to set up an India-Middle East-Europe Economic Corridor (IMEC) at the recently concluded G-20 Summit in New Delhi. Mint takes a closer look at the idea and the benefit it offers.
How do economic corridors work?
An economic corridor, a term coined by the Asian Development Bank, is an integrated network of infrastructure—including rail, road, and port—within a defined geographical area that connect various economic hubs. They link centres of production with centres of consumption. Corridors can be developed either within a country (Delhi-Mumbai Industrial Corridor, or Bengaluru-Mumbai Economic Corridor) or across nations (IMEC, or China’s Belt and Road Initiative). However, they are not mere transport connections. They play a much larger role by transforming the regions the corridor passes through.
Are there any specific benefits of corridors?
Plenty. To start with, they cut the time and costs of logistics. They enable the emergence of industrial clusters along their path, and this can catalyse economic growth. In fact, some hold that such corridors can develop regions which otherwise would have remained backward—by creating employment in these regions and improving the standards of living. According to a World Bank study, China’s Belt and Road Initiative (BRI), once fully implemented, will reduce travel time along the corridor by 12%, improve trade by 2.7%, increase incomes by up to 3.4% and lift 7.6 million people from extreme poverty.
What are some of the well-known economic corridors?
The 6,400-km Silk Road linking the East and West for over 1,400 years may have been the first. Today, other than BRI, there is the Greater Mekong Subregion Economic Corridor that connects Thailand, Cambodia, Vietnam, Laos, and Myanmar; another connecting Almaty in Kazakhstan and Bishkek in Kyrgyzstan; and China-Pakistan Economic Corridor.
What is the current status of BRI?
Recently, the total investment under BRI crossed $1 trillion. But there are signs China is slowing down on BRI. With the economy slowing down, China is averse to funding large projects far away from home. BRI has come under flak for other reasons too. It has pushed countries such as Pakistan, Sri Lanka into debt. Many nations have accused China of gaining strategic influence through these projects which pay inadequate attention to local needs, disregard sovereignty, and have adverse environmental impact.
In what way will IMEC be different?
In 2002, the G7 launched the Partnership for Global Infrastructure Investment (PGII) to fund infrastructure investment in emerging countries. The world’s seven richest countries were to collectively mobilize $600 billion by 2027 to counter BRI. IMEC is part of this initiative. US President Joe Biden said all projects funded by PGII will be transparent, build climate change resilient infrastructure and achieve gender equality. Apart from rail, road and port infrastructure, it will also have pipelines to move clean hydrogen.
