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Relooking the Role of Transport Infrastructure in Trade, Regional Growth and Governance: Comparing the Greater Mekong Subregion

Speakers
Dr François Bafoil, Head of Research, CERI CNRS, Sciences Po Paris


 Date
05 May 2010

 Venue
SR 901, Level 9, 11 Slim Barracks Rise, NTU@one-north campus, Executive Centre, Singapore 138664

 Time
3.00pm – 5.00pm

Event Review

In this research seminar, Dr Bafoil questioned the link between transport infrastructure, economic growth and development. By comparing Central Eastern Europe (CEE) with Greater Mekong Subregion (GMS), Dr Bafoil presented several crucial findings from his studies on the “unexpected effects” of infrastructure on growth and development. His main thesis was that development is highly dependent on the structural context: infrastructure, market organisation, institutions and governance. If good governance and strong institutions are lacking, infrastructures can deepen territorial inequalities and economic growth can lead to increasing poverty. It can be observed that economic growth promotes regional imbalances and “trade increases the power of the richest, not the poorest.”

How to translate the economic growth into development? Dr Bafoil said that “there is no (single) key for success”. Nevertheless, several important lessons can be learnt from the CEE experience. First of all, there is no automatic links between economic growth and development: development needs to be organised, hence “policy intervention” by public authorities is necessary. Given the economic and social disparities between the countries that have joined the EU in successive waves of enlargement and the older Member States, the European Union (EU) has developed a complex Cohesion Policy with three main objectives: (1) convergence for the least-developed Member states and regions; (2) regional competitiveness and employment; (3) European territorial cooperation to strengthen cross-border cooperation.

For the period from 2007-2013, cohesion policy constitutes 35.7% of the total EU budget. Such a big share of the budget corresponds to the enormous challenge EU has to tackle: the national GDP of the CEE countries was just around 40% of the average when they joined the EU (in 2004 and 2007). Although there has been a partial convergence towards the EU average, the current global economic crisis is having an enormous impact on economic prosperity in CEE, and it will further deepen the gap between the regions. Besides, even though at the national level there has been a convergence with the EU average, the subnational regional development has been uneven. Therefore, the focus of the EU’s different policies is increasingly on territorial inequalities which require a special planning. The aim now is not only to achieve efficiency, but also equity.

The EU is also developing the Trans-European Networks (TEN) in order to link the various regions by modern and efficient infrastructure. Many of the TEN projects have been financed by the Cohesion Fund. However, Dr Bafoil explained that the economic growth in the CEE has been driven mostly by domestic demand and accession to the EU, without significant improvements in transport infrastructure (especially in the case of Poland). Therefore, the infrastructure is seen as a “bottleneck” for further economic growth.

In GMS, there are also huge disparities between different regions; however in Asia, there is no equivalent of such policy for regional cohesion as in the EU. Instead, the Asian Development Bank is contributing to the development of infrastructure through the Economic Corridors, but these, according to Dr Bafoil, do not address the problem of less developed and “enclaved” regions. Dr Bafoil expressed his concern that if the projects are focused on the economically advanced regions (main urban poles), it would generate only growth, but not necessary, development. Dr Bafoil also shared his observations from his previous field-studies that in many places there is a clear disconnect between efficiency and equity, because local authorities tend to be solely profit-oriented and the projects sometimes are implemented without any regulation. The crucial question is how to assure a proper implementation of the GMS Cross-Border Transport Agreement and what should be the role of public authorities in this. As it was stressed by Dr Bafoil, this is “not only a question of money” but also about functioning governance: how to achieve coherence and convergence of public policies through different forms of governance so that the huge infrastructure projects would benefit the wider population outside the main urban poles.

In the course of the seminar, Dr Bafoil also highlighted some similarities between CEE and GMS, for instance, the question of minorities and their social and economic inclusion and various “soft issues”, like “wrong rules and weak institutions”. He concluded that there is still much research needed on how to achieve a positive link between infrastructure, economic growth and development.