The Impact of Infrastructure on Trade and Economic Growth in Selected Economies in Asia

Abstract

Infrastructure plays a key role in facilitating trade, especially since recent trade liberalization in Asia has resulted in significant tariff reductions. This study quantifies the impacts of both hard and soft infrastructure on trade volume for exporters and importers in the region as well as on various economic growth indicators. Results demonstrate that improvements in transport infrastructure (i.e., the road density network, air transport, railways, ports, and logistics) have resulted in increased trade flows. Information and communications technology (ICT) infrastructure has also enhanced trade, as the numbers of telephone lines, mobile phones, broadband access, internet users, and secure internet servers are found to have positive trade effects for both exporters and importers in Asia. Thus, although more attention has traditionally been given to hard infrastructure, the impact of soft infrastructure on trade flows must also be more thoroughly examined.