Conclusions

Over the next few decades, developing Asian economies are likely to make up the lion's share of the fastest growing markets in the world. An important part of this growth will come through trade expansion, regional integration through the fragmentation of production networks across national borders, and the broadening and deepening of international capital flows to support trade and production expansion. Already, close to a quarter of world trade takes place between countries sharing a common border and half of world trade occurs between partners less than 3,000 kilometers apart (Berthelon and Freund 2004).

The impacts of trade-related infrastructure are being leveraged by coordination across borders. Supported by a conducive policy environment and capitalizing on regional externalities through cooperative arrangements, the expansion, improvement, and maintenance of infrastructure services can reduce trade costs and facilitate trade expansion, economic growth and development, and regional integration.

The demand for information and related services (such as finance and telecommunications) can be expected to grow faster than the demand for transportation of goods and people. The telecommunications and internet revolution has restimulated international integration, resulting in growing trade in information and ICT, in outsourcing services, and in migration of highly skilled labor. Similarly, as the density of economic activity increases with population and income growth, and modern flexible manufacturing practices spread, moving production closer to consumers, there may be an increasing demand for short-haul relative to long-haul transportation, at least in the domestic context.

Efforts to expand and enhance infrastructure services will reduce costs of doing business, of achieving economies of scale, and of international trade, helping to maximize growth and the benefits of regional trade and investment integration. At the same time, infrastructure improvements, complemented by trade expansion, will attract and facilitate greater investment in productive capacity, expand access to markets and employment opportunities for the poor, and broaden the range of consumer choice for Asia's billions.

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