Impact of Cross-border Transport Infrastructure on Trade and Investment in the GMS
Fujimura, Manabu; Edmonds, Christopher | March 2006
Abstract
This paper investigates the impact of cross-border transport infrastructure on the economies of the Greater Mekong Subregion (GMS).1 Cross-border and domestic transport infrastructure together can reduce trade costs and lead directly to increased trade and investment. Reduced trade costs can also indirectly induce increased foreign direct investment (FDI) mainly through intra-firm vertical integration across borders that exploits the comparative advantages of each location, and in turn, such increases in FDI can further increase regional trade, adding to the direct effect of trade expansion. This defines a virtuous triangle of mutually reinforcing effects between cross-border infrastructure development, trade, and investment, the final effects of which are higher economic growth and—if necessary institutions and policies are in place to ensure the poor take part in this growth—poverty reduction. Increased trade and growth also expand the fiscal resources available to governments thereby enabling consideration of new policy options (e.g. investments in education, health, or social protection systems).
Citation
Fujimura, Manabu; Edmonds, Christopher. 2006. Impact of Cross-border Transport Infrastructure on Trade and Investment in the GMS. © Asian Development Bank. http://hdl.handle.net/11540/3636. License: CC BY 3.0 IGO.Keywords
Development Economics
Regional Economic Development
Economic Impact
Asian Development Bank
Development
Economic Boom
Regional Economic Integration
Good Governance
Governance Approach
Economic planning
Economic structure
Growth policy
Trade relations
Trade policy
Trade policy
Economic development
Economies in transition
International economy
Border integration
Economic integration
Gross domestic product
Trade policy
Institutional Framework
Public Administration
Business Ethics
Regional economics
Economic forecasting
Economic development projects
Success in business
Business
Free trade
Business
Economics
Communication in economic development
Restraint of trade
International economic integration
Trade blocs
East-West trade
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