Growing Together: Economic Integration for an Inclusive and - escap

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CHAPTER THREE 63 Building seamless connectivity There are clearly wide disparities in the breadth and quality of infrastructure between countries of the region. From the perspective of regional connectivity, the gap between the few wealthier countries and the middle- and lower-income countries is hindering the full participation of countries in the region’s economic dynamism. Improving regional connectivity will allow countries in Asia and the Pacific to take full advantage of the region’s diverse natural endowments and productive capacities. Against this backdrop, this chapter will explore issues of connectivity for three major sectors, namely transport, energy and ICT. Transport Transport is the backbone of economic activity and social development. Since ancient times, the availability and cost of transport have influenced both the location of trade centres and the volume of trade. Large-scale increases in production and trade have been made possible with advances in transport, such as the diffusion of containerization. Most governments recognize that the responsibility for developing transport infrastructure lies with them, and are therefore investing in ambitious medium- to long-term transport strategies and programmes. However, when it comes to improving connectivity, each mode of transport – roads, railways, maritime shipping and aviation – has its own physical and operational characteristics which require different considerations. Aviation and maritime shipping, for example, essentially move people and goods from point-to-point without intervening infrastructure. Consequently, investment in these sectors has focused on individual airports and maritime ports. In the past century, maritime ports dominated international trade and, as a result, attracted investment from both the public and the private sector. Landbased modes and inland water transport, on the other hand, require the development of roads, railway tracks and inland waterways across vast geographic areas. The sheer scale of these networks means that the cost of maintaining them is much greater than that for airports and maritime ports. Non-physical barriers to the movement of people and goods are also greater for overland crossings as compared with maritime ports or airports because the risk of damage and theft is higher and more difficult to monitor. In the Asia-Pacific region, the maritime and aviation sectors are relatively well connected to their respective global networks. There is also a higher degree of private sector involvement in developing and managing infrastructures in these sectors. From a regional perspective, therefore, the priority should be given to the development and upgrading of landbased transport infrastructure. Tremendous efficiency gains could also be realized by removing non-physical barriers to transport and improving intermodal connectivity. Both of these steps would improve the efficiency of transport services and raise the utilization rates of existing infrastructure. Maritime transport The expansion of international trade in Asia and the Pacific has depended on building the capacity and efficiency of its major seaports, particularly container ports. For the past two decades, the region has dominated global container handling, led first by Hong Kong, China and Singapore in the early 1990s and followed by China from the mid-1990s to today. In 2011, the world’s eight busiest container ports were in the ESCAP region: Shanghai (China); Singapore; Hong Kong, China; Shenzhen (China); Busan (Republic of Korea); Ningbo (China); Guangzhou (China); and Qingdao (China). 5 Asia’s most important liner routes, by volume, still run from Asia to Europe and North America. But there has been a substantial increase in intra-Asian shipping, particularly between China, Japan and the Republic of Korea, and between these countries and South-East Asia. Almost all the region’s coastal countries are now linked by direct shipping services or by transhipment and transit operations through hub ports. Nevertheless, there is significant intercountry variation; shipping connectivity is still poor between many neighbouring countries. 6 The Pacific island developing economies have the added disadvantage of
eing located at a long distance from the fastgrowing economies in the rest of the region. Because of their remoteness, relatively small populations and low trading volumes, it is difficult for shipping companies to maintain regular services to them. One measure of shipping connectivity is the United Nations Conference on Trade and Development (UNCTAD) Liner Shipping Connectivity Index, which includes measures of the number and capacity of ships and the extent of services. 7 This shows that between 2006 and 2011, shipping connectivity increased markedly in a number of the Asia-Pacific economies. The highest value of the index as of 2011 is for China, followed by Hong Kong, China; and Singapore (figure III.1). The value of the index has grown spectacularly fast in Viet Nam, which as of 2011 was ranked seventh in the region. An ESCAP study which analyses differences in trade costs found that liner shipping connectivity accounts for about 25 per FIGURE TITLE III.1. UNCTAD liner shipping connectivity index, 2006 and 2011 160 140 120 100 80 60 40 20 0 Maldives Myanmar Samoa Cambodia Bangladesh cent of the changes in trade costs that are unrelated to non-tariff policies. 8 Thus, as a country’s liner connectivity index improves, the cost of shipping declines, boosting competitiveness and increasing container traffic. Data presented in table III.1 support this observation, suggesting that as liner connectivity increases, so does the volume of container traffic. 9 Conversely, those countries which have witnessed a decline in liner shipping connectivity, such as several island developing countries in the Pacific are likely to have faced higher trade costs in 2011. Governments can attract more ships, and a wider range of ships, by investing and maintaining their maritime ports. They may also improve competitiveness by improving the efficiency of onward land transport, particularly through railways. More ambitious programmes of upgrading and modernization could be accelerated, however, through the greater participation of the private sector in the development of ports and provision of port services. 2006 2011 Papua New Guinea Fiji New Zealand Philippines Russian Federation Indonesia Iran (Islamic Republic of) Pakistan Thailand Turkey Sri Lanka India Viet Nam Japan Malaysia Republic of Korea Singapore Hong Kong, China China Sources: ESCAP based on UNCTAD, Review of Maritime Transport (Sales No. E.09.II.D.11), Review of Maritime Transport (Sales No. E.10.II.D.4), Review of Maritime Transport (Sales No. E.11.II.D.4); and Containerisation International, Containerisation International Yearbook 2011 (London, 2011). Note: The index has five components: (a) the number of ships; (b) the total container-carrying capacity of those ships; (c) the maximum vessel size; (d) the number of services; and (e) the number of companies that deploy container ships on services from and to a country’s ports. 64
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iv Growing Together articulates a n
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vi The following experts prepared t
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viii CONTENTS (continued) Page Chap
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x FIGURES I.1. Real rates of growth
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xii TABLES I.1. Transitions from mi
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xiv ABBREVIATIONS (continued) CEPA
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xvi ABBREVIATIONS (continued) RCM R
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xviii The term “Pacific” in thi
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xx opportunities for all social gro
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xxii Many of the labour flows withi
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xxiv development gaps. Land routes
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xxvi development agencies and priva
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xxviii weighted mean Gini coefficie
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CHAPTER ONE 1 UNDP Photo The case f
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CHAPTER ONE 3 FIGURE TITLE The case
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CHAPTER ONE 5 The case for regional
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CHAPTER ONE 11 The case for regiona
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CHAPTER FIVE 113 Economic cooperati
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CHAPTER FIVE 125 FIGURE TITLE Econo
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CHAPTER FIVE 131 FIGURE TITLE Econo
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CHAPTER SIX 135 Towards an inclusiv
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CHAPTER SIX 137 Towards an inclusiv
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139 Annex Technical notes Photo by
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141 Annex Technical notes ii. Expor
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143 Annex Technical notes of the ag
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References 145 Photo by Warren Fiel
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References 147 __________ (2009). E
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References 149 Brenner, Cath (2009)
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References 151 __________ (2010b).
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References 153 Hertel, T., ed. (199
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References 157 Quah, Danny (2010).
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