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ADB Institute – Regional Economic Impacts Of Trans-Caspian Infrastructure Improvement: Implications For The Post-COVID-19 Era

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

Tokyo, Japan (PortSEurope) September 28, 2021 – Last July, the Asian Development Bank Institute published the working paper “Regional Economic Impacts of Trans-Caspian Infrastructure Improvement: Implications for the Post-COVID-19 Era”. The Trans-Caspian International Transport Route (TITR), also known as the Middle Corridor, combines the countries participating in the new Silk Road project and important players of the region. Its members are leading maritime and transport
companies from Kazakhstan, Azerbaijan, Georgia, Ukraine, China and Turkey. The organisation aims to popularise the middle corridor, accelerate and simplify cargo transportation procedures between Asia and Europe, and make special preferential tariffs. Between East and West, in terms of cargo, the middle corridor helps to compete with the north-south routes. TITR allows European companies to bypass Russia, which until now sanctions the transit of certain types of goods through the country. A number of Russian entities are under sanctions from the international community following Russia’s annexation of the Crimea in 2014. The importance of this route was underlined with the inclusion of Georgia and Azerbaijan in the European Union (EU) TEN-T network. The institute published the following 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. This study conducts 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, the study suggests 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.” The full report can be downloaded here Copyright (C) PortSEurope. All Rights Reserved. 2021.

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