Appraisal Econometrics for Proposed Transport Corridors

Abstract

Transport corridors to stimulate regional integration and trade have become a popular development tool. But when they fail to generate the expected wider economic benefits, they can become wasteful or unequitable investments. This paper evaluates the relative strengths and weaknesses of econometric methods as applied today to appraise the proposed placement of transport corridors and the project design to distribute benefits more widely; the future potential of these methods; and an emerging synthesis in some recent studies. The review focuses on network, reduced-form, and structural (general equilibrium) econometrics. At the current juncture, from the policy-making perspective, combining network econometrics based on the notion of centrality with reduced-form regressions comprising interactive effects could be the most practical approach. Future research could focus on advancing structural general equilibrium econometrics to cover multiple markets together with network econometrics to consider the interaction of heterogeneous agents.