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Abstract
The China-Pakistan Economic Corridor (CPEC), a multi-billion dollar
infrastructure investment project, is heralded as a game changer for
Pakistan’s economy and for regional cooperation more generally(1). As
a crucial part of the major development initiative led by China, known
as ‘One Belt, One Road’ (OBOR), to connect Asia with Europe, the
Middle East and Africa, the CPEC is widely linked to hopes, interests,
as well as regional and global geopolitics. However, such a megaproject
also raises numerous questions, especially with regards to the
feasibility of its implementation, the impact on the region and, India’s
stance vis-a-vis the endeavour. Therefore, this Research Paper seeks to
shed light on involved interests and challenges, potential impact on
regional development and makes special reference of India’s role in it.
Introduction
Regionalism in South Asia has focused on collective efforts to overcome mostly weak,
congeneric economies, political fragmentation, socio-religious cleavages and the deep-rooted
conflicts that exist among its member states and societies. To enhance regional cooperation,
the idea of an Economic Corridor (EC) is finding its way into foreign policy strategies as it
becomes a buzzword in plans for stimulating economic growth and deepening integration of
Asia’s sub-regions.2 This idea has taken root early on in South East Asia, spearheaded by the
Greater Mekong Subregion (GMS) initiative in 1992. In South Asia, prominence of economic
corridors is a more recent phenomenon, currently the most advanced example is that of the
China-Pakistan Economic Corridor (CPEC).3
Against this backdrop, this research report will focus on following questions: Firstly, will the
CPEC have an impact on the integration of the politically and economically disadvantaged
provinces such as Balochistan, Khyber Pakhtunkhwa (KPK) and the Federally Administered
Tribal Areas (FATA)? Secondly, can we expect CPEC to serve as a pioneer project for further
regional economic cooperation and integration beyond the Pakistan-China nexus? In other
words, will this bilateral endeavour be an impetus or rather another hindrance for current
regional cooperation? Thirdly, what are the perceptions, expectations, interests, and
challenges regarding CPEC in the larger context of China’s major development strategy of
‘One Belt, One Road’ (OBOR) on both the provincial and central level in Pakistan? Who are
the driving forces behind the CPEC? Fourthly, what might be the positive or negative social,
economic and political impact of government’s Pakistan’s current policy approach to CPEC?
Fifthly, will CPEC live up to its ambitious aim as an economic corridor or will it not move
beyond the stage of a transportation corridor for Chinese and Pakistani goods and people?
Conceptualising Economic Corridors
The focus on economic corridors has become a trend of strategic development in various
countries and regions worldwide.4 Basically, one can state that an economic corridor is a
project of economic development targeted at increasing economic growth over a certain
period of time and in a specific area. 5 Nevertheless, despite the increasing scholarly
engagement, there is no agreed upon definition. Rather, one could describe its nature as an
emerging but fluid concept, embedded6 in shared characteristics that provide a common
ground.
Subsequently, from a conceptual point of view, ECs link economic agents along a defined
geographical entity and provide important connections among economic nodes or hubs
(usually) centered in urban landscapes7.8 More concretely, ECs link production, trade and
infrastructure within a specific geographic framework of the centre of economic activities and
extend benefits to rural areas through transport development and expansion of production
activities.9 As such, a corridor is designed to create global, regional and domestic value
chains, connect economic nodes and (ideally) has a positive multi-sectoral spillover effect. In
order to achieve this a corridor must move beyond simply serving as a ‘passage for the transit
of goods and commodities (and people?)’. It must function as an ‘industrial corridor’ and
“develop a sound industrial base, served by competitive infrastructure as a prerequisite for
attracting investments into export oriented industries and manufacturing”.10
Keeping all this in mind, in order to realise its full potential an economic corridor requires
economic-, organisational,- institutional-, behavioural-, political- and planning aspects:
First of all, one must conceptualise a growth zone/region/sub-region based on cultural,
historical, ecological and economic commonalities.
Secondly, one must conduct a survey to identify economic nodes or industrial centres or
clusters of the region. Ideally, the identified locations encompass a “large amount of
economic resources and actors”.11
Thirdly, these centres and clusters must be linked through various connectivity projects and
production chains.12 This connectivity between the nodes in the corridor is crucial, without
strong functional links no significant economic movement and interaction between the nodes
will/can take place.13 This also implies the existence of an efficient feeder system to improve
the connectivity, like an integrated train, tram, metro, and bus system and a system to
facilitate pedestrian movement.14
Fourthly, an economic corridor must be endowed with “an enabling industry, one that is able
to meet goals inherent to transport as well as other pressing national and social objectives”.15
These objectives include “economic growth, creating a high and rising standard of living for
all citizens, increased trade, especially with neighbouring countries; improved access to
employment opportunities; and increased social integration”.16 In this context, it is most
important that an economic corridor does not merely function as a transit corridor for goods
and commodities, especially not predominantly for the donor country(ies). Such a ‘container
in – container out economy’ stands in stark contrast to the idea of economic corridors as
development enhancing factor. In order to avoid such a trajectory, the successful
establishment of full-fledged Special Economic Zones (SEZ) and industrial parks are of great
importance.
Fifthly, there must be a pre-existence of economic viability.17 More concretely, the area in
which a corridor is to be developed must (1) show pre-existent strong economic growth, (2)
show a natural propensity and strong effective demand for further mixed-use development
and (3) be free of inhibitors.18 Simply put, this means that the development of a corridor in the
region must make ‘economic sense’, if they are not economically feasible and do not offer
investors a ‘satisfactory cash return’ on their investment - especially if weighed against an
array of opportunities - they will not become a reality19
Sixthly, all actors involved must possess the political will to implement the necessary
measures. Decision makers on all levels of government and sector representatives need to be
fully committed to the corridor-project. This requires a co-operative, constructive mindset
among all major players, without it, a successful and comprehensive implementation of the
corridor remains unlikely.20
Seventhly, the economic corridor development must be based on an integrated and
comprehensive planning. In other words, there needs to be a co-operative and overarching
direction to oversee and execute the corridor vision, the respective plan, the planning process,
and the implementation of the plan. In order to devise and administer such a centralised
approach, all relevant socio-economic and socio-political realities have to be taken into
account. 21 Additionally, actions by governmental- (like sectoral agencies/departments
responsible for land use policy and management, transportation planning and infrastructure
investment and maintenance, security sector agents among others) and non-governmental
actors are imperative to ensure all the realisation of the corridor-vision.22 Any actions that run
counter to the vision will need to be adequately addressed.
Against this backdrop, there must be an independent body able to manage and ensure
comprehensive implementation and regulation.23 Anybody responsible for the planning and
the implementation of the corridor and respective projects needs the necessary capacity and
mandate to function properly24 and will likely require an institutional transformation25 in all
levels of government. In addition to the establishment of effective planning bodies, the
corridor would also greatly benefit from the reduction of excessive regulations, rigid
conformity to formal rules and regulations and, other bureaucratic hindrances imposing on the
decision-making- and implementation processes. In brief, it is rather senseless to prepare
corridor plans without enforcing or implementing them, or hamper their plans because of
unnecessary red tape.26
Eighthly, the corridor proposal must include a concrete action plan with a complementary
time-frame. The action plan should outline exactly when key investments (like energy,
infrastructure among others) in the corridor will be made to ensure private sector trust and
involvement.27
Ninthly, the success of a corridor development depends significantly on geographic stability
and security. Without guarantees to the security, stability and planning reliability in the
medium to longer term, potential investors will be hesitant to make any investments at all.
In this context, one should also note that the success of an economic corridor depends greatly
on a favourable, positive image and perception among the broader public, the media and
potential investors of both a corridor and the wider area in which it is located.
Last but not least, economic corridors must have an inclusive and comprehensive character, it
is not enough that economic corridors are integral to the economic fabric and the economic
actors surrounding it. If this were to be the case, economic corridors would generate limited
economic benefits as they remain isolated (understood as a narrow, exclusive area of
operation). In order to achieve maximum benefits, economic corridors must pervade into
larger economic networks, such as global and regional value chains and production
networks.
....
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2834599
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2834599
This is a comprehensive scholarly study of CPEC
The Full paper in PDF format is downloadable from the link source above
The China-Pakistan Economic Corridor (CPEC), a multi-billion dollar
infrastructure investment project, is heralded as a game changer for
Pakistan’s economy and for regional cooperation more generally(1). As
a crucial part of the major development initiative led by China, known
as ‘One Belt, One Road’ (OBOR), to connect Asia with Europe, the
Middle East and Africa, the CPEC is widely linked to hopes, interests,
as well as regional and global geopolitics. However, such a megaproject
also raises numerous questions, especially with regards to the
feasibility of its implementation, the impact on the region and, India’s
stance vis-a-vis the endeavour. Therefore, this Research Paper seeks to
shed light on involved interests and challenges, potential impact on
regional development and makes special reference of India’s role in it.
Introduction
Regionalism in South Asia has focused on collective efforts to overcome mostly weak,
congeneric economies, political fragmentation, socio-religious cleavages and the deep-rooted
conflicts that exist among its member states and societies. To enhance regional cooperation,
the idea of an Economic Corridor (EC) is finding its way into foreign policy strategies as it
becomes a buzzword in plans for stimulating economic growth and deepening integration of
Asia’s sub-regions.2 This idea has taken root early on in South East Asia, spearheaded by the
Greater Mekong Subregion (GMS) initiative in 1992. In South Asia, prominence of economic
corridors is a more recent phenomenon, currently the most advanced example is that of the
China-Pakistan Economic Corridor (CPEC).3
Against this backdrop, this research report will focus on following questions: Firstly, will the
CPEC have an impact on the integration of the politically and economically disadvantaged
provinces such as Balochistan, Khyber Pakhtunkhwa (KPK) and the Federally Administered
Tribal Areas (FATA)? Secondly, can we expect CPEC to serve as a pioneer project for further
regional economic cooperation and integration beyond the Pakistan-China nexus? In other
words, will this bilateral endeavour be an impetus or rather another hindrance for current
regional cooperation? Thirdly, what are the perceptions, expectations, interests, and
challenges regarding CPEC in the larger context of China’s major development strategy of
‘One Belt, One Road’ (OBOR) on both the provincial and central level in Pakistan? Who are
the driving forces behind the CPEC? Fourthly, what might be the positive or negative social,
economic and political impact of government’s Pakistan’s current policy approach to CPEC?
Fifthly, will CPEC live up to its ambitious aim as an economic corridor or will it not move
beyond the stage of a transportation corridor for Chinese and Pakistani goods and people?
Conceptualising Economic Corridors
The focus on economic corridors has become a trend of strategic development in various
countries and regions worldwide.4 Basically, one can state that an economic corridor is a
project of economic development targeted at increasing economic growth over a certain
period of time and in a specific area. 5 Nevertheless, despite the increasing scholarly
engagement, there is no agreed upon definition. Rather, one could describe its nature as an
emerging but fluid concept, embedded6 in shared characteristics that provide a common
ground.
Subsequently, from a conceptual point of view, ECs link economic agents along a defined
geographical entity and provide important connections among economic nodes or hubs
(usually) centered in urban landscapes7.8 More concretely, ECs link production, trade and
infrastructure within a specific geographic framework of the centre of economic activities and
extend benefits to rural areas through transport development and expansion of production
activities.9 As such, a corridor is designed to create global, regional and domestic value
chains, connect economic nodes and (ideally) has a positive multi-sectoral spillover effect. In
order to achieve this a corridor must move beyond simply serving as a ‘passage for the transit
of goods and commodities (and people?)’. It must function as an ‘industrial corridor’ and
“develop a sound industrial base, served by competitive infrastructure as a prerequisite for
attracting investments into export oriented industries and manufacturing”.10
Keeping all this in mind, in order to realise its full potential an economic corridor requires
economic-, organisational,- institutional-, behavioural-, political- and planning aspects:
First of all, one must conceptualise a growth zone/region/sub-region based on cultural,
historical, ecological and economic commonalities.
Secondly, one must conduct a survey to identify economic nodes or industrial centres or
clusters of the region. Ideally, the identified locations encompass a “large amount of
economic resources and actors”.11
Thirdly, these centres and clusters must be linked through various connectivity projects and
production chains.12 This connectivity between the nodes in the corridor is crucial, without
strong functional links no significant economic movement and interaction between the nodes
will/can take place.13 This also implies the existence of an efficient feeder system to improve
the connectivity, like an integrated train, tram, metro, and bus system and a system to
facilitate pedestrian movement.14
Fourthly, an economic corridor must be endowed with “an enabling industry, one that is able
to meet goals inherent to transport as well as other pressing national and social objectives”.15
These objectives include “economic growth, creating a high and rising standard of living for
all citizens, increased trade, especially with neighbouring countries; improved access to
employment opportunities; and increased social integration”.16 In this context, it is most
important that an economic corridor does not merely function as a transit corridor for goods
and commodities, especially not predominantly for the donor country(ies). Such a ‘container
in – container out economy’ stands in stark contrast to the idea of economic corridors as
development enhancing factor. In order to avoid such a trajectory, the successful
establishment of full-fledged Special Economic Zones (SEZ) and industrial parks are of great
importance.
Fifthly, there must be a pre-existence of economic viability.17 More concretely, the area in
which a corridor is to be developed must (1) show pre-existent strong economic growth, (2)
show a natural propensity and strong effective demand for further mixed-use development
and (3) be free of inhibitors.18 Simply put, this means that the development of a corridor in the
region must make ‘economic sense’, if they are not economically feasible and do not offer
investors a ‘satisfactory cash return’ on their investment - especially if weighed against an
array of opportunities - they will not become a reality19
Sixthly, all actors involved must possess the political will to implement the necessary
measures. Decision makers on all levels of government and sector representatives need to be
fully committed to the corridor-project. This requires a co-operative, constructive mindset
among all major players, without it, a successful and comprehensive implementation of the
corridor remains unlikely.20
Seventhly, the economic corridor development must be based on an integrated and
comprehensive planning. In other words, there needs to be a co-operative and overarching
direction to oversee and execute the corridor vision, the respective plan, the planning process,
and the implementation of the plan. In order to devise and administer such a centralised
approach, all relevant socio-economic and socio-political realities have to be taken into
account. 21 Additionally, actions by governmental- (like sectoral agencies/departments
responsible for land use policy and management, transportation planning and infrastructure
investment and maintenance, security sector agents among others) and non-governmental
actors are imperative to ensure all the realisation of the corridor-vision.22 Any actions that run
counter to the vision will need to be adequately addressed.
Against this backdrop, there must be an independent body able to manage and ensure
comprehensive implementation and regulation.23 Anybody responsible for the planning and
the implementation of the corridor and respective projects needs the necessary capacity and
mandate to function properly24 and will likely require an institutional transformation25 in all
levels of government. In addition to the establishment of effective planning bodies, the
corridor would also greatly benefit from the reduction of excessive regulations, rigid
conformity to formal rules and regulations and, other bureaucratic hindrances imposing on the
decision-making- and implementation processes. In brief, it is rather senseless to prepare
corridor plans without enforcing or implementing them, or hamper their plans because of
unnecessary red tape.26
Eighthly, the corridor proposal must include a concrete action plan with a complementary
time-frame. The action plan should outline exactly when key investments (like energy,
infrastructure among others) in the corridor will be made to ensure private sector trust and
involvement.27
Ninthly, the success of a corridor development depends significantly on geographic stability
and security. Without guarantees to the security, stability and planning reliability in the
medium to longer term, potential investors will be hesitant to make any investments at all.
In this context, one should also note that the success of an economic corridor depends greatly
on a favourable, positive image and perception among the broader public, the media and
potential investors of both a corridor and the wider area in which it is located.
Last but not least, economic corridors must have an inclusive and comprehensive character, it
is not enough that economic corridors are integral to the economic fabric and the economic
actors surrounding it. If this were to be the case, economic corridors would generate limited
economic benefits as they remain isolated (understood as a narrow, exclusive area of
operation). In order to achieve maximum benefits, economic corridors must pervade into
larger economic networks, such as global and regional value chains and production
networks.
....
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2834599
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2834599
This is a comprehensive scholarly study of CPEC
The Full paper in PDF format is downloadable from the link source above
