Concluding Remarks and Future Directions

This paper undertook a general equilibrium assessment of the impacts of infrastructure development across the GMS. Supporting databases developed for this study facilitated the assessment of outcomes across the whole GMS, including poverty impacts, in a way that has not previously been possible. Our findings suggest that strong gains to the GMS countries should result from infrastructure development and trade facilitation, with particularly positive impacts on incomes and poverty levels in the relatively poor countries of Cambodia and the Lao PDR. While we found particularly significant gains from trade facilitation, it must be remembered that these gains will not be possible without first improving physical connectivity to enable efficient road transportation between countries in the region.

We are mindful of the need for a supportive institutional and domestic policy environment that allows markets to develop and take advantage of the new opportunities offered by improved infrastructure and trade facilitation measures. We also acknowledge that serious data issues remain in the GMS, including matching domestic data to international frameworks and the problem of unrecorded border trade. Informal trade appears to account for a significant share of cross-border trade in the GMS, perhaps on the order of 20% to 30% of trade (Athukorala 2007). There are also a number of limitations in the types of simulations we are able to undertake, particularly because estimates of benefits such as reduced travel costs are sparse and there are challenges in translating these into modeling scenarios that will appropriately capture the impact of the infrastructure development in the GMS. We must also note that there are difficulties in trying to separate the benefits of cross-border transport infrastructure development from domestic infrastructure development. Despite these and other limitations, we hope that the current study offers useful insights into some of the socioeconomic impacts of transport infrastructure, a key development issue for the GMS.

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