**Lowering Transport Costs and Prices by Competition: Regulatory and Institutional Reforms in Low Income Countries**

#### **Phill Wheat \*, Alexander D. Stead, Yue Huang and Andrew Smith**

Institute for Transport Studies, University of Leeds, Leeds LS2 9JT, UK; a.d.stead@leeds.ac.uk (A.D.S.); y.huang1@leeds.ac.uk (Y.H.); a.s.j.smith@its.leeds.ac.uk (A.S.)

**\*** Correspondence: p.e.wheat@its.leeds.ac.uk

Received: 26 July 2019; Accepted: 7 October 2019; Published: 25 October 2019

**Abstract:** High passenger and freight transport costs are a barrier to economic growth and social mobility, particularly in Low Income Countries (LICs). This paper considers the current state of knowledge regarding the barriers to achieving lower generalised transport costs. It considers both the road and railway modes across passenger and freight transport. These issues include a reform on the regulations for driver hours (preventing the road infrastructure from overloading), structuring rail concessions, increasing competition, and tackling corruption. Such reforms aim to deliver efficiency gains and service quality improvements at lower costs for users. This paper identifies the knowledge gap in previous research and concludes by setting out a research agenda that builds the evidence base for how the best practices from around the world can best be applied to the specific circumstances in Low Income Countries, with a particular focus on Sub-Saharan Africa and South Asia.

**Keywords:** transport costs; passenger and freight; road and railway; Low Income Countries

#### **1. Introduction**

Transport is an important enabler of economic growth and society's development [1–3]. Strategic transport along road and rail corridors presents several challenges from a cost, subsidy, and pricing perspective. This is particularly important in low-income countries (LICs), where limited studies have yet to explore economic and mobility needs. Efficient transport services require appropriate funding to meet user needs. These services must be offered at prices that are affordable to facilitate the free flow of goods and services and to increase the mobility of people. Furthermore, a strong oversight of road traffic transit regulations and rail concessions by public authorities is vital for regulatory compliance, including road safety.

This paper addresses a broad set of mode-specific issues, such as road versus rail, and issues common to both road and rail in LICs, specifically aimed at LICs in Sub-Sharan Africa and South Asia. The aim of the paper is to identify both outstanding issues not fully addressed by existing research and such issues that future research, in turn, can help address. Thus, our paper focuses on identifying opportunities for new research. This paper covers issues related to lowering transport costs in terms of the generalised cost of transport. This includes not only financial costs but also the monetary equivalent values of intangible aspects of transport services. Examples include the travel time for shipments and passenger journeys, the associated reliability of that transit time, and service quality aspects, such as the perceived comfort of passenger travel and wider safety considerations impacting users and the broader society (such as other road users in the case of road safety issues).

The role of road transport and rail transport differs both between LICs and high-income countries (HICs) and across different LICs. In HICs, both modes cover freight and passenger movements. Overall, road transport is dominant, but rail still has a non-trivial mode share in both the passenger and freight

market. In LICs, experience varies. In Sub-Sharan Africa, the lack of railway infrastructure means that, for passenger flows outside of the long distance segment (which is small in any case), the road mode is dominant. As such, the rail transport that exists is biased towards freight. In South Asia, however, LICs can have substantive railway transport focused on passenger flows (for example in Bangladesh and Myanmar).

More broadly, road and rail services are different because roads are open to private users whilst rails have much stronger access restrictions. Studies on the regulation, concession design, and institutional skills requirements for planning, designing, and monitoring transport services have been reviewed. Given the access restrictions in rail, these issues are more applicable to the rail sector. The situation for roads is different, where the state usually provides the infrastructure either directly or indirectly via letting tenders, but private users are also free to use the infrastructure. The issues with respect roads are more focused on regulations on driver hours, road safety, and preventing the over loading of vehicles and tackling corruption. Such reforms aim to deliver efficiency gains and service quality improvements at lower costs for users.

Common to both road and rail are the long and costly clearance times at border crossings. Arvis [4] shows that the cost in the bottom three quintile LICs is three times higher, and its paperwork twice as high as that for the top two quintiles LICs. The literature also indicates that transit time and the reliability of transit impact freight choices and that cross-border delays significantly increase freight tariffs. Existing evidence on alternative technologies that can help improve cross border crossing is also considered. In many LICs, it is clear that the opportunities presented by strategic roads and rails are not being fully realised for a variety of reasons.

Specific experiences in LICs are considered (both in Sub-Sharan Africa and South Asian but also outside of this area), with conclusions identifying opportunities to enhance transport service delivery, costs, and pricing. Our literature search also reflected the experiences and lessons learned from HICs and MICs that can be applied to LICs, especially where the evidence from LICs is sparse on solutions to specific issues (an example being the regulation of driver hours in Section 3.1). The paper concludes by setting out a research agenda that builds the evidence base for how best practices from around the world can best be applied to specific circumstances in LICs. This research agenda will contribute to realising economic growth and social benefits by improving transport services and transit flows.

The structure of this paper is as follows. Section 2 provides an overview of our approach to reviewing the literature. Section 3 reviews road specific issues. Section 4 reviews rail specific issues. Section 5 reviews common issues across the road and rail sectors. Finally, Section 6 synthesises the state of knowledge review into a set of research issues.

#### **2. Review Methodology**

This paper is a synthesis of the literature. As part of this research project, we undertook a time limited review of literature pertaining to key issues in transport services in LICs and the best practices in responding to these issues across high income countries (HICs), medium income countries (MICs), and LICs. We supplemented our review of databases (described below) with literature on transport services by the project team. Social issues, such as the gender barriers associated with access to transport, were not reviewed as part of this project.

The literature on some of these topics is limited, so the criteria for inclusion were widened in several different ways, so that the review would encompass less specific, but still relevant, studies. Rather than look for literature pertaining specifically to individual countries, or to low-income countries, we searched for any literature on a given topic that was likely to be relevant. For example, several headings relate to rail franchising and regulation. In order to capture a wide range of studies, we entered a few relatively general search terms, such as "railway franchising", and selected publications that seemed relevant to one or more of the headings. These were studies involving low-income countries or studies of high-income countries that were felt to be particularly relevant.

During the search, we noticed that there is something of a trade-off (though not in all cases) between the relevance of publications and their quality. For example, there are a large number of relatively high-quality publications on the topic of franchising in high-income countries, but not all of these studies are of direct interest here. On the other hand, there tend to be a much smaller number of publications related to low-income countries, and some of these tend to be of lower quality or are not peer-reviewed (e.g., World Bank reports and articles in trade journals). A degree of judgement was made to determine which articles should be included in the review. Indeed, this selection is one of the conclusions of this review, namely the need for high quality, peer reviewed studies on LICs for many of these issues. A second issue was that much evidence from LIC countries was centred around specific case studies. The generalisability of the findings across LICs was unclear, and this result is, again, a conclusion of this review.

We used four databases to search the literature: The Transport Research Information Database (TRID), Web of Science, EconLit, and Google Scholar. TRID integrates the database owned by TRB's Transportation Research Information Services (TRIS) and the OECD's International Transport Research Documentation (ITRD) database. Web of Science is a general, multidisciplinary, citation indexing service, and should yield a comprehensive list of results for a given search term. EconLit is an economics-specific database which we expect will yield sets of results that are more limited, but also more specific and with less irrelevant material. Google Scholar is a freely accessible search engine that covers scholarly literature, including peer-reviewed papers, books, and technical reports across an array of disciplines.

In Table 1 below, we give examples of our approach to the literature search for two of the areas covered in this review: the value of time and the value of reliability for freight transport, and railway concessioning, franchising, and regulation, for two of the databases used (Web of Science and Google Scholar). In addition to deciding on the search terms used, it was necessary to decide which of the results to include in the review. In the case of Web of Science, which returned fewer but more relevant results, we used all relevant results, while for Google Scholar, which typically turns up a much greater number of results, including some which are less relevant, we decided on appropriate cut-off points based on the numbers of relevant results as we moved down the list of results.


**Table 1.** Example search terms.

In addition, the following sources were found to contain useful reports:

• World Bank and United Nations sponsored project reports.


The following are typical reasons for literature being excluded from the review:


The culmination of our review was to identify a set of issues, which are grouped in Table 2. We will, in turn, discuss in the remainder of this paper the issues that are specific to road transport, rail transport, and issues that are common across the two modes. Within this, approximately 100 papers were found to provide relevant unique contributions to this review.

**Table 2.** Summary of the issues in road and rail freight transport with references.


While we consider our review to be extensive, it is not a systematic review. Instead, it was a time limited review with the scope and approach discussed above. As such we may have missed some relevant literature. However, we note that our review has been subject to review by academic experts selected by the Department for International Development in the United Kingdom. They have helped supplement the material in this review to be evaluated by the academic author team, thereby providing a secondary check, alongside our primary review methodology, to ensure we have not missed key literature.

#### **3. Road Specific Transport Services Issues**

In the road sector, the primary issues relate to regulation, governance, and the enforcement of regulations. This includes driver hour regulations, road safety regulations, efforts to combat corruption, and vehicle overloading.

#### *3.1. Regulation of Driver Hours*

The link between working hours and rest time for drivers and the risk of collisions is well established. This suggests the need for regulating drivers' hours of service. Enforcing these hours of service and similar regulations rely upon authorities' ability to inspect company and vehicle records. Technology has progressed from log books, to analogue tachographs, to digital tachographs, which have become progressively more difficult to tamper with and easier to process. Increasingly, as in the UK, it is a requirement that new vehicles be fitted with digital tachographs. The use of digital tachographs suggests the possibility that the authorities may eventually be able to collect data and, therefore, detect infractions in real time.

McDonald [5] argued that regulating drivers' hours reduced the risk of collisions and highlighted the need for the enforcement of, and adherence to, these regulations. Baas [6] surveyed truck drivers in New Zealand and found high levels of fatigue and sleepiness and also that many drivers exceeded the allowed driving hours. In a review of the literature, Amundsen [7] emphasised the high proportion of professional drivers reporting incidents of fatigue and falling asleep while driving, as well as the link between the length and quality of sleep and accident risk. The authors attributed the low levels of compliance to the complexity of regulations and suggested that harmonisation across countries may improve compliance and safety. Based on a survey of UK truck drivers, Poulter [8] found that perceived behavioural control had the largest effect on compliance with regulations than other 'soft' factors.

Hall [9], using data from the Fatality Analysis Reporting System of the US National Highways Traffic Safety Administration, estimated that a 3–5% reduction in crashes could be achieved with perfect enforcement of hours of service regulations. Jones [10] compared the working hour regulations in several countries and suggested a 'hybrid' approach to regulation, combining prescriptive measures (e.g., hours of service) and a less prescriptive 'outcomes based' approach. However, overall, there is a lack of evidence related to LICs in this area, which could be studied in future research. The experiences and lessons learned from previous practices in developed economies can be applied to an LIC based on its prevailing conditions.

#### *3.2. Road Safety Regulation*

Road safety is a particular problem in developing countries, and there has been much discussion of the issue with regard to Africa specifically, where accident and fatality rates have increased along with vehicle ownership [11,12].

Driver licensing and vehicle licensing are generally the responsibility of government agencies. The enforcement of traffic laws and regulations is generally the responsibility of traffic police and courts, while some government agencies have a role in the roadside inspection of freight vehicles.

Assum [13] appraised the road safety initiatives in five African countries: Benin, Côte d'Ivoire, Kenya, Tanzania, and Zimbabwe. The author concluded that each country has the legal framework, organisation, technology, and institutions required for road safety and is aware of effective road safety measures, as well as the scope of the problem. However, a number of weaknesses were identified, such as their lack of political concern and funding, their lower value placed on human life, the weak political positions of their road safety boards, their overreliance on education and information approaches, and their corruption.

Khayesi [14] discussed the growth in road traffic injuries in Africa and the need for governments to improve data collection and analysis, share between agencies, and tackle the problem of under-reporting. Chen [15] noted an ongoing upward trend in road traffic injuries, and identified the lack of leading agencies with regulatory powers and public support as one of the key obstacles to reducing injury rates.

Sumaila [16] discussed the limitations of the Federal Road Safety Corps in Nigeria and recommended restructuring the agency and strengthening the strategic ties with other government departments and agencies to increase their effectiveness. The need for driver education in road safety was also emphasised.

Abegaz [17] analysed the effectiveness of new road safety regulations in Ethiopia. These regulations include bans on the use of mobile phones while driving, driving without a seatbelt, and riding a motorcycle without a helmet, as well as strengthening existing laws on drunk driving, speeding, and unsafe loading. Using data from the period of 2002–2011, the authors found considerable reductions in fatalities and accident rates following the first year after the introduction of these new regulations.

#### *3.3. Corruption and the E*ff*ectiveness of Road Safety Regulation*

Nantulya [11] discussed road traffic injury rates and the reasons for the differing rates and trends across countries, citing corruption as one of the main factors behind high injury rates in developing countries. Kopits [12] found a non-monotonic relationship between GDP per capita and traffic fatality rates, that traffic fatality rates increase initially with income, but begin to fall after a threshold income level. The authors noted that, since vehicle ownership rates increase monotonically with income, this turning point reflects reductions in fatalities per vehicle. This inverted-U shaped relationship was also found by Anbarci [18]. Importantly, Anbarci [18] also found that public sector corruption is associated with increased traffic fatalities. Various ways that corruption can affect traffic fatality rates were outlined: corrupt license examiners may allow drivers to bypass training and testing for a fee; corrupt vehicle inspectors may sell safety certificates for unsafe vehicles; and corrupt traffic police may accept bribes to overlook infringements and undermine faith in traffic regulations by extorting money from innocent drivers.

Tackling corruption by public officials is, therefore, important for road safety. Measures could include increased monitoring and detection and the punishment of offenders via some combination of dismissal, fines, and imprisonment. An alternative, or complementary, concept suggested by Becker [19] is to pay efficiency wages above the market-clearing rate, with mark-ups reflecting the potential benefits of corruption and the risk of being caught. This increases the costs of engaging in corruption and may be less costly than increased monitoring. Empirical support for an inverse relationship between wages and corruption was provided by Van Rijckeghem [20].

#### *3.4. Road Freight Overloading*

Vehicle overloading, where vehicle axle loads exceed pavement design limits, is a specific issue on African roads. This occurs because freight operators overload cargo to maximise their payload and operational efficiency and reduce fuel costs (per tonne-km output). However, overloading significantly affects the life of the highway pavement's asset. Rys [21] studied the effect and concluded that if 20% of trucks are overloaded, the life of the road pavement reduces by about 50%.

The reason that vehicle overloading is important for examining barriers to lower transport costs is three fold. Firstly, there is a cost impact on the whole system when overloading the road network because the infrastructure deteriorates faster. This ultimately results in a poor use of resources if sufficient resources do exist. At some point, the operators or society will have to pay for this increase in costs. Secondly, in an LIC environment, funds for maintenance and renewal of infrastructures are scarce. Thus, the impact of overloading tends to be that infrastructure quickly degrades into a state that leads to poor quality, resulting in the slowing down and unreliability of road transport. Thirdly, a lack of compliance with overloading regulations can result in the lack of a level playing field between transport providers, which skews competition and enhances corruption in the sector.

To provide insight into the extent of the problem, we highlight three case studies. The World Bank (2005) found that 30% to 40% of trucks in India are overloaded by 25% to 50%. This report contained data on truck operations in India, such as vehicle operating costs, toll rates, and journey times, that can be used in the economic appraisal of overloading and enforcement measures. A case study by Kolo [22] found that 53% of trucks using a rural road in Nigeria were overloaded. They took a similar approach to Bagui [23] and analysed the percentage and magnitude of overloading separately based on the number of axles and positions (e.g., front and rear) of the axles. Chan [24] showed that the weight limit was exceeded by as much as 100%, and some 50–70% of heavy trucks were overloaded in a central province of China, compared to 0.5–2% overloaded in the USA.

Turning to road safety, an overloaded vehicle is difficult to control because it is operated outside the vehicle's design parameters for steering and braking and thus becomes a serious threat to road safety. Overloading leads to increased congestion caused by damaged roads and accidents that increase logistics costs in the region. According to Toll Infrastructure Services [25], transport operators largely welcome overloading control as they value a level playing field that fosters fair competition between modes and operators.

For these reasons, overloading control is a priority, and static weighbridges are used to control overloading. Toll Infrastructure Services [25] have estimated there to be 260 weighbridges in Africa, with plans for another 40. This quantity of bridges has undoubtedly had a strong beneficial effect. Pinard [26,27] has documented the steady reduction in overloading due to weighbridge use in South Africa, Namibia, Zimbabwe, and Zambia. In addition to the technical solution of weighbridges, the decriminalisation of related offences has also produced benefits, according to Pinard [27].

However, static weighbridges have their limitations. They are inflexible and control a load at a specified point but do not cover the whole network. An alternative that has been available for implementation for several years is portable weigh-in-motion (WIM) devices. These devices allow a road authority to set up temporary checks. Though less accurate than static installations, these portable devices are recommended by, for example, Bagui [23]. According to Cottineau [28], overload control using WIM was tried in Taiwan, with a 30% tolerance margin due to potential measurement errors. This tolerance margin is higher than is desirable. Current research in France [28,29] is aiming to achieve a 10% tolerance. This, then, is an area where progress can be made, potentially leading to better overloading control.

Alternative technologies are available to monitor and enforce overloading. For example, a framework and field studies have recently been developed for truck overloading and novel control and monitoring methods in China and South Africa. The measures proposed by Hu [30] include weight sensors installed in vehicles, wireless device sending data to a GPS installed in the driver's cab, and a remote control terminal to receive and process the information sent by the GPS.

Overall, vehicle overloading can be combated by monitoring technology, and there has been instances of success, such as in South Africa, Namibia, Zimbabwe, and Zambia. As we will discuss in Section 5.1, there is also the need for the public authority to have sufficient skills and processes to support technology.

#### **4. Railway Transport Service Specific Issues**

Unlike access to roads, access to railways must be heavily regulated to ensure the safe and equitable scheduling of services. Railways feature a high fixed cost and low marginal cost and are suited to high volume passenger and freight flows. These high flows present a set of challenges to ensuring viable services. These include concessioning passenger services to achieve better financial value, reducing state subsidy requirements, and stimulating passenger demand. This also raises issues surrounding the extent to which it is optimal to separate transport services from the management of the infrastructure (track and signals) and the regulatory needs around such a separation.

#### *4.1. Railway Concessioning*

Rail concessioning (also known as rail franchising) has been adopted in Great Britain (GB), Germany, Sweden, and (to a lesser extent) in the Netherlands and Norway. The EU's fourth Railway Package requires competitive tendering of public service railway contracts. A major study was published by the Centre on Regulation in Europe (CERRE) in 2016, drawing on the lessons from GB, Germany, Sweden, and offering suggestions for countries, such as France, who are about to start the tendering process. For the summary report, see Nash [31]. Individual country reports for GB, Sweden, Germany, and France are also available (see Smith [32], Nilsson [33], Crozet [34], and Link [35]).

Typically, rail franchising in Europe has produced cost reductions on the order of 20–30%. However, Britain has instead seen sharp cost increases (see Smith [32]). In Great Britain, an incoming operator takes over an existing company, rather than bringing his or her own rolling stock and staff. Combined with short franchises that are also net cost contracts, this incentivises a focus on revenue growth rather than cost reduction (see Smith [32]). In addition, British rail franchises may be too large, such that they face diseconomies of scale (see Wheat [36]). Costs and subsidies have risen substantially in France, where there has been no tendering Nash [31]. Affuso [38] used UK data to investigate the relationship between contract length and investment and found that short franchise lengths reduce incentives to invest in some assets.

Generally, demand has risen strongly in countries that have implemented tendering. However, part of this growth may be related to the "regionalisation" of responsibility for tendering, because France has also seen growth. Nash [31] lists key considerations to be made in future tendering:


A recurring problem in Great Britain has been franchise failure. This has been less of a problem in other European countries, partly because of their greater use of gross-cost contracts, and possibly because their franchises are much smaller (see Nash [31]). Smith [39] discussed policy responses to franchise failures and their impacts on the performance of Train Operating Companies (TOCs) in GB. These have included placing TOCs on management contracts (these are essentially cost-plus regimes with extra subsidies and, hence, weak incentive properties), short term franchise renegotiations, and placing TOCs temporarily under public ownership. The authors found that the efficiency of TOCs on management contracts deteriorated markedly, but this was not the case with franchise renegotiation. Outside Europe, franchise failure has also been a problem (for example, in Melbourne during the early years of their reforms and in Latin America [40]).

Cruz [41] analysed renegotiations of road and rail concessions in Portugal, where renegotiations have been common, particularly in the very early years of the contract. The authors noted that renegotiation itself is a very costly process, and should be avoided where possible. The authors indicated that the main reasons for contract renegotiation were the inadequate monitoring and enforcement of contract terms and over-optimistic bids.

Outside of Europe, Carbajo [42] pointed to lower public subsidies and increased passenger numbers following rail concessioning in Argentina. They also defined early problems, such as difficulties in enforcing investment plans and imposing fines. Crampes [43] discussed issues in concession contract design, with reference to the Argentine experience, and recommended a form of menu regulation. Under menu regulation, companies choose from a menu of contracts offering different trade-offs between the rate of return, risk, and profit sharing. In choosing their optimal bundle, a company is forced to reveal information about itself to the regulator, which helps to mitigate information asymmetry (the fact that the company knows more about its activities than the regulator). This could potentially lessen the likelihood of regular and costly renegotiations or failures.

Campos [44] found that performance indicators generally improved rail privatisation in Mexico and that concessions may have contributed to reversing railway declines in developing countries. The author concluded that concessions can be a viable approach in developing countries, although care should be taken in concession design.

The analysis of around 1000 concessions in different industries (including the road, rail, energy, water, and telecommunications industries) in Latin America and the Caribbean concluded that concessions can work well [45]. However, the author found that the implementation of the contracts was flawed in many cases, and opportunistic renegotiations should have been dissuaded. Further, he found that most implementation mistakes could have been avoided by improved design and a greater intention to develop incentives.

Guasch [46] emphasised the importance of regulators in reducing the probability of renegotiations. Likewise, Guasch [47] found that regulators and arbitration processes both reduced the probability of government-led renegotiation, while price capping, longer contracts, elections, and growth shocks all increased the probability of renegotiation. Using data on road and rail concessions in Latin America, Estache [48] found that multi-criteria auctions (considering social goals, such as employment) increased the risk of renegotiation but that this problem could be mitigated by high-quality regulations and anti-corruption policies.

Rodríguez [49] concluded that rail (and road) concessions are more likely to fail if large-scale capital investments are involved, if they are in developing countries, if they involve urban transport, or if they demand uncertainty. Stern [50] emphasised the complementarity of contracting and regulation and the role of an independent regulatory agency in building trust between stakeholders, resolving conflicts, and enabling ordered renegotiations.

Tam [51] discussed three successful and three failed transport infrastructure BOT (build–operate–transfer) concessions in Asia. These were road concessions but are included here, as the findings can transfer to the design of rail concessions, and this study features specific comparisons of LICs and HICs. The authors identified reasonable rates of return, sound mechanisms for the adjustment of terms, strong and technically competent franchisees, and equitable and experienced governments and legal systems as the factors needed for success. Frequent changes in government, corruption, and political interference are identified as factors explaining failure. All three of Tam's (1999) success stories are from an HIC, such as the Hong Kong Special Administrative Region of the People's Republic of China, while all three failures are taken from Thailand, an LIC.

In Kazakhstan, rail reforms from 2005 separated train operation and infrastructure maintenance and encouraged competition in the passenger and freight markets via franchising and open access arrangements, respectively. Sharipov [52] finds that usage and safety both improved, while subsidy levels increased.

Gwilliam [53] stated that 14 of the 30 African countries with state-owned railways use concession arrangements, that four had begun the concession progress, and that only one was operating under a management contract. The rest were subject to political influence. Roy [54] noted that infrastructure investments have tended to remain the preserve of governments and aid agencies.

The introduction of railway concessions in Africa has been accompanied by significant investments in assets, including rolling stocks [54,55], and improvements in productivity [53–55] and allocative efficiency [55]. Budin [56] noted an impressive increase in freight traffic and a substantial improvement in quality of service during the first year of the Abidjan-Ouagadougou railway concession. Roy [54] concluded that there was no indication of an increase in freight rates or that travel for the poor has been made more expensive. Pozzo [57], reviewing railway concessions in Sub-Saharan Africa, found that, due to competition from road transport and clauses against excessive pricing in concession contracts, there was no clear evidence for an abuse of market power. Ndonye [58] evaluated the impact of different public–private partnership (PPP) strategies on the performance of concessions, focusing on the Rift Valley Railways concession in Kenya. A survey of managers indicated a perception that the most important strategic considerations for the performance of concessions are having a strong private consortium as a concession-holder, a sound financial strategy, having a sustainable risk allocation strategy, and investment in technology.

Railway concessions in Africa face significant risks, however. Roy [54] noted the disruptions caused by the civil war in the Ivory Coast and the collapse of a bridge in Malawi. Jones [59] cited political unrest in Kenya in 2008 as affecting the Rift Valley Railways concession, along with political pressure from governments. Pozzo [57] notes the generally weak financial performance of Sub-Saharan African railway concessions and the private sector reluctance to invest in transport in the region or to take on any risk.

Related to the design of rail transport services concessions is its ability to integrate into the management of rail infrastructures (the extent of vertical integration). In Europe, EU legislation has required some form of vertical separation. Countries such as Britain and Sweden have followed full legal separation, whereas others, such as Germany, have used a holding company structure. Mizutani [60] and van de Velde [61] reviewed the literature and provided both quantitative and qualitative assessments of different approaches to separation. A key finding is that, in congested networks, capacity constraints may magnify the misalignment of incentives, such that vertical separation increases costs. This suggests that a holding company or even full vertical integration are preferable. Partly as a result of these studies, European legislation permits both approaches.

Fair infrastructure access is important, especially when the incumbent operator also manages the infrastructure. This necessitates the independent oversight of track, station, and terminal access charges and capacity allocation in order to ensure that new operators can freely access the infrastructure while adequately compensating the infrastructure manager. This is crucial to enabling the emergence of new operators while ensuring the financial stability of the infrastructure manager.

#### *4.2. Economic Regulation of Infrastructure and Services*

Transport services tend to operate as (i) directly provided state services, (ii) competition in-the-market (open access), or (iii) competition-for-the market (tendered services). These delivery mechanisms need to be investigated as to the level of protection they provide to final (passenger and freight) users from exploitation.

The 'natural monopoly' property of infrastructure management, i.e., the falling average up to a minimum efficient scale, implies that:


A key study in the EU funded project, NETIRAIL-INFRA, examined how cross-industry innovation and cost reduction can be stimulated through a range of regulatory, contractual, and structural approaches (see Nash [37]). Benedetto [62] surveyed regulatory reforms across European railways based on a review of the literature on ideal regulatory characteristics. They found that while European rail regulators generally exhibit many of the features of ideal regulation, there is room for a more proactive approach to shaping the role of track access charges and in regulating the efficiency and quality of infrastructure managers.

Britain has had the most extensive powers of any economic regulator in Europe for many years. This regulator has conducted or commissioned many studies using econometric techniques to determine cost efficiency savings [39,63,64]. These have highlighted inefficiencies in Network Rail (the railway infrastructure manager) and have been used for setting cost efficiency targets. This form of benchmarking and price cap regulation (which refers to the setting of limits on the prices or revenue that a firm will receive) is considered to be successful for utilities but is arguably less successful for rail [65,66]. Smith [67] showed how the increased powers of economic regulators have contributed to efficiency savings and how these powers interact with other reforms.

#### **5. Road and Rail Transport Service Issues**

In addition to the issues specific to road and rail freight transport described in the previous two sections, there are issues common to both modes, which are described in this section.

#### *5.1. Public Authority Capacity and Skills*

There are many instances where transport infrastructure in developing countries has been of low quality, and investment is biased towards 'prestige projects' that may not reflect the most efficient approach for investment [68]. Lee [69] noticed a tendency to focus on investment rather than institutional and regulatory setups and to identify poor financial and environmental sustainability but no comprehensive approaches to poverty, safety, and environmental issues.

Sohail [70] undertook case studies for transport regulation in Sri Lanka, Pakistan, and Tanzania, and highlighted the need for appropriate regulatory frameworks and more effective enforcement.

Mexico provides a useful case study for how public agency skills develop over time. The Agency for Rail Transport (ARTF) was recently established in response to complaints by freight shippers

about tariffs and service levels. The International Transport Forum [71] compared the capabilities and functions of the ARTF to those of its US and Canadian counterparts, discussed issues in Mexican rail regulation, and outlined priorities for the new regulator. This report highlighted the considerable time needed for ARTF to develop an information base and capabilities comparable to more established regulators and report the recommended discussions with Mexican concession holders and the US and Canadian regulators to determine the financial and operating data that ARTF will need.

Until ARTF's capabilities are fully developed, the ITF recommends a low cost, less prescriptive approach to regulation based on negotiation and arbitration and the continuity of existing safety regulations in the short run. The development of safety regulations based on performance criteria, rather than prescribing certain behaviour and design requirements, was identified as a long-run priority. ITF identified the need for a "critical mass of human skills and management resources spread across law, economics, accounting, and engineering" comparable to that of US and Canadian regulators.

In discussing the regulation of railway concessions in Africa, Gwilliam [53] identified inadequate provisions for regulators as an impediment to effective regulation. The author stated that "many railway concessions in Africa lack formal regulatory structures with real power and are thus susceptible to abuse". In addition, the author listed factors impacting concession performance, including conflicts and delays with the governments over compensation, concession fees, time frames, staffing, administratively imposed salary increases, restrictions on access to container facilities, and unfunded public service requirements.

In the road transport sector, overloading of trucks provides an example of the challenges facing public authorities in LICs. Different institutions are responsible for overload control in different countries, and there are differences in institutional capacities and responsibilities for overload control. Strathman [72] highlights that authorities can influence compliance through changes in both enforcement intensity and the severity of penalties and finds that the marginal effects of these elements in deterring overloading are similar.

The role out of enforcement measures also creates challenges for public authority resources. In particular, alternative routes without weighbridges and the shortfalls in weighbridges necessitate adequate policing of the road network. Overload control strategies should focus on regions and not one stretch of road. Further, Chen [73] suggests that mobile weighbridges could be used to identify severely overloaded trucks before being escorted to weighbridges. However, this "first best" solution would create massive demands for a skilled work force.

Therefore, checking truck weight compliance places high demands on resources, and its efficiency is generally low. In 2014, 20% of the two million vehicles weighed in South Africa exceeded the weight limit. Only 2.6% of the 20% were prosecuted, according to Council for Scientific and Industrial Research reported in Engineering News [74]. Officers accepted bribes and operators paid their way through the weighbridges. Corruption is a major hindrance to compliance. Low fines are imposed, and the practice is seen as 'unimportant' by the Department of Justice [74].

Overall, there is no one solution to combat overloading. However, any solution requires both an investment in technology (weighbridges, etc.) and a strong institutional structure with clear and accountable roles of public authorities and the individuals working within them. This translates to other public authority enforcement activities (such as the road safety enforcement discussed in Section 3.2).

#### *5.2. Cross Border Road and Rail Freight—The Impact of Delays*

The time to clear goods through customs rises sharply if the goods are physically inspected. Physical inspection is far more prevalent in lower-performing countries, as defined by Arvis [4], because of the quality of their logistics services, and the same shipment may be subject to repeated inspections by multiple agencies. Clearance times for the bottom three quintile (20%) performing countries are three times as much, and the paperwork twice as much, as those for the top two quintiles [4].

The key business and trade implication of such barriers is that export lead times are nearly four times as long for LICs than for HICs. Thus, the benefits of reducing the time and time uncertainty at borders include increased international trade and investment, new commercial opportunities, access to new materials, reduced input costs, and improved competitiveness.

Using data on landlocked Sub-Saharan African countries, Christ [75] conducted an analysis on the relative size of time costs versus money costs. Christ concluded that time costs (barriers to trade due to time taken to clear customs, for example) generally exceed the monetary costs of trucking. The study suggested that this helps explain why such countries have a comparative advantage in primary commodities, such as metals and agricultural products, while hindering the export of time-sensitive goods. Thus, border and transit delays reduce both the overall volume of trade and the impact of the mix of products traded, which may hinder development.

The extent to which benefits can be realised depends largely on the response of freight operators, and thus the extent to which such improvements reduce freight costs. It is, therefore, important to know the value of time (VOT) and value of reliability (VOR) from the perspective of freight operators.

While there is a large quantity of literature on the estimation of road users' VOT/VOR, much less research has been undertaken regarding the VOT/VOR for freight, particularly in the context of low-income countries. An overview of the methods by de Jong [76] distinguished between the factor cost methods that sum the monetary costs of the factors used (e.g., labour and fuel costs) and modelling approaches, including the revealed preference (RP) (based on an analysis of the impact of various characteristics on modal choices) or the stated preference (SP), which uses survey methods.

Summaries of VOT and VOR findings for rail and road, and overviews of the methods used, are provided by Feo-Valero [77], de Jong [76], and Zamparini [78–80]. A recurring narrative from this literature is that the reliability of journey times is very important to freight shippers [81] and is possibly more important than the journey time itself [82–85].

Shinghal [86] analysed a survey of firms sending freight via the Delhi–Bombay (now known as Mumbai) corridor and found that the reliability of transit times was particularly important for exporters. Larranaga [87] found that reliability and cost were the most important attributes in explaining freight mode choice in Rio Grande do Sul, Brazil. Norojono [88] concluded that safety and reliability were more important factors than travel time in explaining the choice between rail and road freight by Indonesian freight shippers. Similar findings are presented by Arunotayanun [89], who used the same data. These findings complement the HIC studies in suggesting that reliability is paramount.

However, Zamparini [90] found, from an SP survey of the logisitics managers of 24 Tanzanian firms, that reliability was one of the least important service attributes and that transit time and the monetary value of damage and losses is more important. The authors pointed out that this may reflect the challenges facing freight transport in Tanzania, where transport infrastructure is of low-quality compared to other Sub-Saharan African countries and LICs, leading to slow freight and high rates of damage and losses.

Ogwude [91] found that VOT and VOR vary significantly between the shippers of consumer goods and shippers of capital goods in Nigeria. Cundill [92] derived RP VOT estimates for road, rail, and pipeline freight traffic in Kenya and found that modal choice was sensitive to the cost and speed of delivery. In Malaysia, Thomas [93] found that journey time savings due to road improvements resulted in relatively small increases in vehicle utilisation because of other constraints.

Border issues with freight transport are of particular concern in landlocked developing countries (LLDCs), for whom the direct maritime transportation of international freight is not an option. This has been a major impediment to development for LLDCs, which face bottlenecks not only at the seaport but also at each transit country [94].

Zhang [95] analysed VOT in the context of rail freight from Tianjin Port in China to Ulan Bator, the capital of Mongolia. Compared to an average passenger journey time of 32 hours, the average rail freight journey time was 13.1 days: 4.3 days waiting at Tianjin Port, 3.8 days travelling from Tianjin to the Mongolian border, 1.2 days waiting at the border, and 3.8 days from the border to Ulan Bator. The

authors described the route as being of great importance to landlocked Mongolia, as it is the shortest and most commonly used route to Mongolia's nearest seaport. Border issues derive from the need for the transhipment of freight from road to rail and from the standard gauge railways in China to the broad-gauge railways in Mongolia.

Banomyong [96] compared the various routes available to garment exporters from Laos, another landlocked country. The authors found that their preferred route (i.e., on the grounds of the estimated cost and time) via Malaysia was not the same as that of the most frequently used route via Thailand.

#### *5.3. Cross Border Road and Rail Freight Solutions: E-Border Technology and Standardised Documentation*

Given the discussion in Section 5.2, measures to improve the flow of goods across borders and through corridors are essential to enable low transport prices and stimulate trade. Customs procedures are becoming increasingly similar worldwide. However, customs is not the only agency in border management. Streamlining border procedures to facilitate trade and simplifying documentation for imports and exports have long been high on the trade development agenda, prompting initiatives to bring border agencies together and create a single window for trade. We have collated findings from research done for countries in Asia and Africa with regard to their barriers and recommended measures.

In Asia, a roadmap for the integration of logistics services was endorsed in 2007 by ASEAN (Association of Southeast Asian Nations) members. The promotion of IT both within and among the parties in the logistics chain are considered conductive to the processing of documents and other trade-related matters. The ultimate goal is to establish an ASEAN single window, adopt a 24 × 7 customs operation, and offer provisions in the World Trade Organization (WTO) agreement for customs valuation. Inefficient customs procedures and inspections are considered by De Souza [97] to be the biggest barriers to logistics services in ASEAN. Gupta [98] found that unwieldy customs procedures and inspections, a lack of coordination, and arbitrary rulings are barriers to freer cross-border trade within ASEAN. Tongzon [99] found that the implementation of measures to improve the competitiveness of ASEAN logistics industries has been limited and characterised by a significant perception gap between logistics firms and governments.

In Africa, Adaba [100] examined the effect of an e-government initiative to modernise customs procedures and facilitate trade in Ghana. Hinson [101] found that a 1% increase in internet use by a country's population is associated with a 2.2% increase in exports through a reduction in the entry and search costs associated with exporting from Africa. Hoffman [102] suggested that cross-border delays could be reduced by more than 80% through the interchange of information to facilitate the dynamic scheduling of customs processing capacities and operational changes.

Arvis [103] highlighted issues associated with border crossing in landlocked developing countries (LLDCs). These issues apply to both the Asian and African continent. In response to these challenges, several technologies/systems have been developed in LLDCs to facilitate trade via e-border technology [103]. These include:


• The GPS tracking of merchandise. Benefits include helping to build confidence between customs and transit operators and leading to the disuse of inefficient control solutions, such as convoys.

Specifically, on rail transit, the new Annex 9 of the UNECE (United Nations Economic Commission for Europe) International Convention on the Harmonization of Frontier Controls of Goods (the UNECE Harmonization Convention), is expected to streamline railway border crossing procedures through:


It can be seen from the above review that the measures recommended by UNECE will apply to, and improve on, current practices in Asia and Africa.

#### **6. Discussion and Conclusions: Opportunities for Future Research**

This paper has reviewed the broad state of knowledge for road and rail transport services in LICs. The aim of the paper was to identify outstanding issues not fully addressed by existing research that future research can help address. We have focused on the issues most prevalent to LICs in Sub-Sharan Africa and South Asia. This review has covered a wide range of topics, from franchising and concessioning, to various aspects of safety and economic regulation, to waiting times for border transit. This discussion makes it clear that LICs face considerable challenges in these areas and that resolving these issues will be important to their development. Based on this review, we have identified the following three areas for further academic research. This is not an exhaustive list but a prioritisation of what specific issues academic research can address.

Firstly, we note that this literature review has attempted to draw on the best practices that might be applicable to LICs. In doing so, evidence from LICs (both specifically in Sub-Sharan Africa and South Asia, as well as elsewhere in the world), MICs, and HICs has been considered. However, it is clear, overall, that there is a limited set of systematic evidence specifically for LICs. There are case study examples for LICs (with many examples focusing on the failures rather than successes of their applications, e.g., in concessioning). However, a general finding from the reviewed literature is that in the area of Transport Services for LICs, there is limited research that synthesizes experience across a range of countries. This type of systematic analysis is essential to yield best practice and generalizable findings for LICs. Thus, a key recommendation is the need for a greater quantity of, and more systematic, research in the area of Transport Services in LICs.

Secondly, transporting goods in Africa often takes three times longer and is three to five times more expensive than in Europe, Asia, and Latin America. This literature review has indicated that transit time and reliability affect freight transport choices. This is the case for both LICs and HICs, with evidence of border waiting times for cross-border freight having negative economic impacts on LICs.

Cross-border freight is a major concern for LICs and is stifling trade and economic development, particularly in landlocked countries. Research is needed to establish how new technologies and border process alignments can speed up and improve reliability at border crossings. The economic and social benefits arising from improved transit times would be assessed and, where possible, quantified. This research would need to provide a holistic appraisal of the benefits to improving freight transit across national borders.

Technological solutions at borders, such as developing an ICT infrastructure and smart border control measures, such as non-intrusive inspection and fully paperless systems (e-border) systems, will need to be considered. A further key research objective is to enhance freight movements between ports and hinterlands, particularly for Small and Medium Enterprises (SMEs) and others requiring effective freight consolidation services, by formulating a coherent and integrated intermodal strategy. This strategy will involve coordination between transport modes and strategies for the development of 'dry ports' (inland freight depots), free industrial zones, inland customs clearance arrangements, and bonded facilities. Consideration around how to harmonise regulations (such as restrictions on container transport by road) is needed, as are requirements for the employment of competent, trained personnel, which will reduce skill shortages and unofficial payments.

Thirdly, the failure of railway concessions will lead to escalating costs, low-quality service provisions, and, in extreme cases, the termination of services, with substantial societal and economic disruptions. An essential requirement for sustainable rail services in LICs is the design of concessions and establishing optimal regulatory and contracting models and solutions, as well as improving the mode share of passenger transport support and many UN Strategic Development Goals. Railways are inherently safer and, therefore, lead to fewer fatalities and accidents (SDG Target 3.6) and cause less environmental damage (SDG Target 3.9). Providing a viable passenger service as an alternative to road transport will increase the reliability and reduce the environmental impacts of the transport system (SDG Target 9.1).

Research should determine when it is appropriate to separate the management of railway services and infrastructure in LICs and to determine the most appropriate separation models. This would include considering the impact of different institutional and organisational structures for railways and, specifically, vertical separation versus vertical integration and intermediate structures. It should also consider which forms of competition (concessions, open access, or franchising) can best improve the efficiency and societal welfare of railways.

**Author Contributions:** Conceptualisation and methodology, P.W.; writing—original draft preparation, A.D.S. and Y.H.; writing—review and editing, A.S.

**Funding:** This research was funded by the UK Department for International Development, grant number HVT/005.

**Acknowledgments:** This research was funded via UK AID through the UK Department for International Development under the High Volume Transport (HVT) Applied Research Programme, managed by IMC Worldwide. The authors are particularly grateful for the advice of, Bruce Thompson the leader of Theme 1, Long Distance Strategic Road and Rail Transport, of the HVT Programme.

**Conflicts of Interest:** The authors declare no conflict of interest. The funders had no role in the design of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript, or in the decision to publish the results.

#### **References**


© 2019 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).

## *Article* **Transport Corridors for Wider Socio–Economic Development**

#### **A S M Abdul Quium**

Former member of staff, United Nations Economic and Social Commission for Asia and the Pacific Secretariat, Bangkok 10200, Thailand; abdul.quium@gmail.com

Received: 31 July 2019; Accepted: 19 September 2019; Published: 25 September 2019

**Abstract:** There can be two broad objectives of transport corridor development: to improve efficiency in the transport and logistics processes in the corridor, and to generate economic development in the corridor region, capitalizing on improved connectivity and transport networks. This paper focuses on the second objective of corridor development. A transport corridor can become a tool for spatially balanced and more sustainable economic development and human well-being in the corridor region. Considering the promise of this approach, this paper undertakes a critical review of transport infrastructure development studies undertaken in Sub-Saharan and South Asian countries to find evidence of infrastructure development impacts. Evidence gathered from the review suggests that transport infrastructure development can have significant positive impacts on economic growth, income, poverty, employment, equity, and inclusion. However, there can be important trade-offs between economy and welfare and environmental quality, and the distribution of impacts can be uneven. The paper also considers how some of the transport corridor development issues are addressed and complementary interventions that may be required, and, finally, discusses lessons learned from the review and their policy implications which can be useful for future corridor designs, and provides suggestions of research studies to fill the current knowledge gaps.

**Keywords:** transport corridor; transport infrastructure; transport development impacts; wider economic benefits; corridor management; South Asia; Sub-Saharan Africa

#### **1. Introduction**

High Volume Transport (HVT) corridors and networks comprise arterial and main roads and railways to form the national transport backbone, which connects the smaller feeder road and rail links. HVT corridors and networks carry the major share of passenger and freight traffic and play a key role in the economic and social development of a country. For example, one transport corridor region in Bangladesh (Dhaka–Chittagong corridor) generates almost 50% of Gross Domestic Product (GDP) and handles about 85% of international maritime trade [1] (pp. 345–357).

The impacts of investments in transport corridors and networks can be substantial. At the macro level, the transport network is linked to national output, employment, and income. At the micro level, well-connected transport networks link producers and consumers and affect people's wellbeing, including poverty alleviation through higher production and wages, new jobs, and lower input and higher output prices. Transport networks also facilitate access to education, employment, health, and other social and cultural facilities.

A well-managed HVT corridor can help to improve the quality of transport and logistics services in the corridor, reduce the cost of transport, increase efficiency in the overall supply and distribution chain, and reduce the carbon footprint of freight transport. In addition, an HVT corridor can bring together infrastructure facilities, policies, institutions, and investments to spur wider socio–economic development.

Transport development is linked to many Sustainable Development Goals (SDGs) and can be used as an intervention tool to achieve some of them (see United Nations (UN) [2] for SDGs). For example, HVT corridors and networks can be a tool to support achieving SDG 9 (sustainable infrastructure: Targets 9.1 and 9.a), and SDG 10 (reduced inequalities: Targets 10.2, 10.3, 10.7, and 10.8).

There are many theoretical works linking the contribution of transport infrastructure to growth and welfare. Aschauer [3] presented an econometric model of the relationship between production and public investments. Krugman [4] examined the forces that concentrate and disperse economic activity across economic space (geography). The new economic geography theories advanced by Krugman [4], Duranton and Puga [5], and other researchers have sought to explain the agglomeration of economic activity and its implications. Venables and Gasiorek [6], Department for Transport [7], Graham and Gibbons [8], Venables [9], and Vickerman [10] have considered the welfare implications of transport improvements in case of market failures and imperfect competition. They argue that conventional cost–benefit analysis (CBA) must be extended to include wider economic benefits (WEBs). WEBs are considered to be additional benefits, as they derive from sources of market failure and imperfect competition.

Discussions on some of the important theoretical works can be found in References [11,12] and elsewhere. It is generally agreed by academics, development practitioners, and policymakers that transport infrastructure is vital for economic development and human wellbeing. Transport development works through several mechanisms and various intermediate outcomes, such as decrease in trade costs, and increase in trade, investment, land value, and assets to induce WEBs in the long run.

An AECOM [13] study explains these effects of transport development in three stages. The first-order benefits (or direct benefits) are related to improvements in travel time, reductions in transport costs, increased reliability, and the introduction of new services, which result in cost reductions to transport users and transport service providers.

The second-order benefits arise as transport improvements enable access to larger markets and to wider facilities and services. The availability of better services and reduced cost of transport influence the location/relocation of firms, volume of trade, and higher agricultural production. An important characteristic of this stage is the visible signs of development: more traffic, shops, buildings, factories, etc.

The third-order effects arise in the long run from structural changes due to economy-wide dynamic processes activated by the second order effects. These changes ultimately lead to positive impacts on people's wellbeing, including poverty alleviation through an increase in employment, higher agricultural production and wages, and higher output prices. These changes, however, may also lead to externalities, such as negative impacts on the environment and some social aspects.

A recent study by Asian Development Bank (ADB) et al. [14] also describes a similar transformational process which leads to a set of final outcomes or wider economic benefits and costs. The chain of effects of transport development can be summarized in Figure 1.

It is important to mention here that the magnitude of such changes in different stages depends on responses of firms and households to effects in the first round, pre-existing conditions, institutional environment, and policy interventions of the government [15,16].

Considering the promise of transport corridors to be an important policy intervention tool, this paper aims to review the current knowledge on wider economic benefits and costs of transport corridor development. The specific objectives include:


**Figure 1.** Effects of transport improvement/intervention. Source: Adapted from Asian Development Bank et al. [14] and based on preceding discussion.

To fulfil these objectives, the paper focusses on evidence from low- and middle-income countries from Sub-Saharan Africa (SSA) and South Asia, but relevant evidence from other developing countries are also considered.

Section 2 provides methodology and data sources. In Section 3, the paper provides a review of the development impacts of transport corridors and networks gathered from both peer-reviewed and grey literature.

The discussion in Section 4 is based on the main findings and lessons learned from the literature review. This section also considers issues related to corridor development and management and their policy implications, and future research to fill some current knowledge gaps.

#### **2. Methodology**

The findings and discussion in this paper are based on desktop literature review.

For this study, both peer-reviewed and grey literature have been used. Using search engines (Google Scholar, Google), an extensive search of online databases, namely, CrossRef, JStor, Research Gate, and Science Direct was undertaken, from which the cited papers were accessed.

The grey literature came from development banks and their institutes (World Bank, Asian Development Bank, African Development Bank, Asian Development Bank Institute, etc.), UN organisations, and research organisations, such as the Economic Research Institute for ASEAN and East Asia (ERIA), and Asian Institute of Transport Development (AITD). The grey literature was accessed mostly from the respective organization's official websites or e-Library.

#### **3. Findings from Literature Review**

#### *3.1. Transport Infrastructure Investment and Economy*

This sub-section first reviews the literature for Sub-Saharan and South Asian countries, followed by a review of some important studies in developed countries. This has been done to find differences of the research in developed and developing countries.

Many studies have found positive effects of transport infrastructure investment on the economy. Although the measured growth effects vary among studies, the positive correlation between transport infrastructure investment and economic development is commonly accepted [17].

A number of studies have provided evidence of the substantial economic and social benefits of transport projects [14,18]. Estimates from multiple studies have suggested cumulative gains ranging from less than 1% to more than 10% of GDP [19–22]. The variation in estimates and other findings is thought to be due mainly to differences in characteristics of individual studies and the difference in context, and related to different phenomena (economic sectors, transport infrastructure, etc.) being measured [23].

A review of 78 studies, including 18 studies in Africa (from six countries, namely, Cameroon, Democratic Republic of Congo (DRC), Egypt, Ethiopia, Nigeria, Tanzania, and Uganda, and six regional studies) provides evidence of the substantial economic and social benefits of transport projects [16]. A meta-analysis of the results has revealed statistically significant benefits of transport networks for real and nominal income, consumption, gender, education, and job creation.

A major study, covering 16 countries in North Africa and 24 countries in SSA, found that infrastructure (transport and other infrastructure) accounts for more than half of Africa's recent economic growth and has the potential to contribute even more in the future [24].

Simulation-based estimates have demonstrated that transport infrastructure and services make substantial contributions to GDP in the long run [21,25–29]. Hahm and Raihan [25] used a Computable General Equilibrium (CGE) model to estimate the total economic gains from the six Belt and Road Initiative (BRI) economic corridors. The estimated gains in terms of percentage of GDP for three BRI countries in South Asia were 7% in Bangladesh, 4% in Pakistan, about 3% in India, and about 6% in Myanmar. For landlocked countries (Kazakhstan, Kyrgyzstan, Lao People's Democratic Republic, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan), estimates vary between 5 and 10% of GDP. However, some other low-income countries, such as Cambodia, may also experience growth in GDP of more than 10%.

Zhai [26] investigated the real income gains from investment in expanded regional transport infrastructure in developing countries in Asia. The analysis has suggested that developing countries in Asia as a whole would gain about USD967.7 billion in 2020, which is equivalent to 6.0% of their baseline income in 2008.

Gilbert and Banik [21] estimated the impacts of South Asia Sub-regional Economic Cooperation (SASEC) transport infrastructure to connect Bangladesh, Bhutan, northeastern India, and Nepal. The simulation study indicated that the cumulative impacts as a percentage of GDP would vary between 0.7% and 14.8% (India 0.7%, Pakistan 2.7%, Bangladesh 4.1%, Sri Lanka 4.6%, and Nepal 14.8%). In absolute value, the gain was the highest for India (USD4330.3 million) followed by Pakistan (USD2600.8 million), Bangladesh (USD2295.1 million), Sri Lanka (USD933.8 million), and Nepal (USD2057.1 million).

Similar potential gains from increased sub-regional infrastructure investments were found in other studies. Stone and Strutt [27] valued social impacts at USD8.1 billion, resulting from moderate improvements to road infrastructure and trade facilitation in the Greater Mekong Sub-region (GMS). A major transport infrastructure project can have similar impacts on regional GDP. Anas et al. [20] used an Input–Output (IO) model to examine the impacts of a major toll way in West Java, Indonesia. Freight costs were found to decrease by 17%, and GDP in Bandung District to increase by 1.2%.

Hlotywa and Ndaguba [30] assessed the impact of road infrastructure investment on economic development in South Africa. The results of the study demonstrate that road transport investment variables account for approximately 86.7% of the variation in economic development in South Africa. Another study in South Africa examined the macroeconomic impact of labor-based road construction in undeveloped rural areas. Input–output analysis of 11 projects found that the GDP multiplier ranges between 1.34 and 1.53 (average 1.45) [31].

Using a cross-country analysis of 60 countries for the period 1980–2010, Ng et al. [32] compared improvement in mobility (by investment in access-controlled highways, such as motorways and freeways), accessibility (investment in local roads providing more direct links to destination), and economic growth. Their study found that improvement in mobility facilitated export-led growth in countries of medium and high-level development. On the other hand, it was more important to facilitate local business and trade activities investment in local roads to improve accessibility in countries of low-level development.

Pradhan and Bagchi [33] examined the effect of road and rail infrastructure on economic growth in India over the period 1970–2010. Using a Vector Error Correction Model (VECM), they found bidirectional causality between road transport investment and economic growth, and unidirectional causality between rail transport investment and economic growth. They also found bidirectional causality between road transport and gross capital formation and unidirectional causality from rail transport to gross capital formation. Considering the findings, they suggested that expansion of transport infrastructure, along with gross capital formation, can lead to substantial economic growth.

Hong et al. [34] examined the linkage between transport infrastructure and regional economic growth in China using a panel data model of 31 provinces from 1998 to 2007. Transport infrastructure was shown to play an important role in economic growth, and road infrastructure contributed more to economic growth in locations with poor roads. A retrospective analysis showed that the uneven distribution of transport infrastructure is an important reason for disparities between regions.

The major highway networks can significantly contribute to the manufacturing output growth of a country. Ghani et al. [18] found that the Golden Quadrilateral (GQ) highway network upgrades led to a substantial increase in Indian manufacturing activity. They found that the largest growth came from the non-nodal districts within 0–10 km of the network, which accounted for 34% of the initial levels. Their estimates credit about 43% of the observed increase to GQ upgrades and the rest to other factors. The N–5 highway in Vietnam had similar high output growth effects [14].

Evidence from the reviewed empirical studies suggests that transport infrastructure investment generally has strong positive growth effects. However, a common limitation of the reviewed studies is that they are restricted in scope, do not analyze how the growth effects of transport investment may have affected other aspects of economy, and, except for one study, do not show how growth effects may vary in different situations and for different groups. Some of the above studies indicate that other policies may have also contributed to the impacts of transport infrastructure. However, the review did not find any study that analyzed how the other policies may have influenced the impacts of transport infrastructure.

Numerous studies were undertaken in developed countries to find empirical evidence that transport infrastructure investment boosts overall economic growth. The Standing Advisory Committee on Trunk Road Appraisal (SACTRA) in the United Kingdom (U.K.) examined the linkages between transport and economy [35]. They observed that empirical evidence of the scale and significance of such linkages was weak and disputed, and concluded " ... that the theoretical effects can exist in reality, but that none of them is guaranteed" [35] (p. 8). A review of evidence on the transport sector's contribution to GDP in the developed countries can be found in Reference [36]. The earlier studies indicate that for a 10% increase in capital stock, GDP increases by about 2%. However, later studies based on more complex modelling indicate a much lower value.

More recently, government agencies and researchers in the developed countries have undertaken studies focusing on estimation of WEBs for inclusion in CBA of transport projects. The Department for Transport (DfT) in the U.K. has been a pioneer in including WEBs in the CBA of transport projects [37,38]. The Department recommends three categories of WEBs, namely, agglomeration, increased or decreased output in imperfectly competitive markets, and labor market impacts, and provides detailed guidelines to estimate them.

Following the DfT, other countries such as Australia and New Zealand have considered the inclusion of WEBs in CBA of transport projects. However, the number and category of WEBs and their treatment in evaluation vary. In New Zealand, five categories of WEBs (agglomeration, imperfect competition, increased competition, labor supply and job relocation) are considered in the evaluation framework, whereas, Australia's framework requires the exclusion of WEBs in CBA. WEBs are reported separately and considered for sensitivity tests, but not as an element of evaluation [39].

An inter-agency Workstream report [40] provides a comparison of WEB estimates for nine urban rail projects in Australia, New Zealand, and the U.K. The estimates for each category of WEB, in proportion to direct benefits in CBAs, varied considerably by project. The highest estimate of WEBs was for the Crossrail project in the U.K. (56%) and the lowest for the Brisbane cross-river project in Australia (19%). A similar comparison of seven rail and road projects can be found in Douglas and O'Keeffe [41]. These estimates show that for many projects, estimated WEBs can be substantial.

A study by Wangsness et. al. [42] investigated how 22 developed countries (Nordic countries, 15 countries in the EU, the USA, Canada, Switzerland, Australia, New Zealand, and Japan) treat WEBs in transport project appraisals. They found that 15 countries recognized at least one category of WEB, and only 10 of them recommended methods for their assessment. The recommended methods generally differed across the countries. Agglomeration benefits, which were most widely recognized, and by far the largest component of WEBs in many studies, were recognized by 14 out of 22 countries. However, only five of them recommended their monetization for CBAs, while the others were in favor of their inclusion in other types of analysis.

The criticisms of WEBs are largely due to questionable assumptions used in estimation methods and application in specific evaluations. Researchers [41,43,44] observed that there were several factors which might lead to biased estimates. These valid criticisms suggest that although the theoretical links are strong, empirical evidence is weak, and estimated values for WEBs are disputed.

The above discussion shows that WEBs are not universally accepted, and researchers and government agencies have divergent views on them. It also suggests that the quantification of WEBs is a new field of research in which more work is required.

Generally, the estimated contribution of transport infrastructure to GDP in developing countries is much higher than in developed countries. This is plausible, as transport networks in developing countries are not well-connected and generally not in good condition. Further infrastructure investment to improve network connectivity or infrastructure quality can produce substantial economic growth. Some of the reviewed studies identified different types of impacts, but did not explicitly consider their underlying causes or separately estimate different categories of WEBs. The review also did not find any study in developing countries that considered estimation methods for WEBs or their consideration in an evaluation framework.

#### *3.2. Trade and Investments*

An empirical study by Buys et al. [12] found that isolation from regional and international markets contributed significantly to poverty in Sub-Saharan Africa. Poor transport infrastructure and border restrictions were identified as significant deterrents to trade expansion. In another study, Hummels [45] found that the volume of trade between countries that share a land border varied widely by regions. It was only between 1 and 5% of trade for Africa, the Middle East, and Asia, compared to 10–20% for Latin America, and 25–35% for Europe and North America.

The land-locked developing countries (LLDCs) in Asia and SSA suffer more than coastal countries because of their higher transport costs. In a study of transport costs and trade, Limao and Venables [46] found that poor infrastructure accounts for 60% of transport costs for landlocked countries, compared to 40% for coastal countries. The estimated elasticity of trade flows with respect to trade cost was around −3. The analysis of trade flows showed that the relatively low level of trade in African countries was due mainly to poor infrastructure.

The decrease in transport cost has been the major driver of the increase in international trade [45]. Freund and Rocha [47] investigated the effects of different components of trade time on export in SSA. They found that a one-day increase in overland travel time implies a nearly 7% decline in exports. Buys et al. [12] investigated the economics of upgrading a primary road network that connects the major urban areas in Sub-Saharan Africa. Simulation results of the study indicated that upgrading has the potential to increase overland trade between countries in Sub-Saharan Africa by about USD250 billion over 15 years. The upgrading programme would require an estimated USD20 billion for initial upgrading and USD1 billion annually for maintenance.

Another empirical study by Bosker and Garretsen [48] also suggested that market access matters for economic development. The study showed that improvement of market access for Sub-Saharan Africa by investing in intra-continent infrastructure or through increased continental integration can have substantial positive effects on future economic development.

Simulation results of a study by Hahm and Raihan [25] showed that all countries under the BRI initiative would experience a rise in exports of goods and services. For example, the increase for Bangladesh, India, and Myanmar would be 3–7%, and 14% for Pakistan. Several other countries would also experience a high increase in exports. Exports of agricultural commodities would increase more than manufactured products. The export increase of agricultural commodities from Bangladesh, Cambodia, Lao People's Democratic Republic, and Myanmar could contribute to poverty reduction in those countries.

Hahm and Raihan [25] also suggested that the increase in imports would be higher than exports. For example, the import increase in Bangladesh, India, and Myanmar would be about 8–14% (compared to 3–7% export increase) and for Pakistan 14% (same as imports), and, for some countries, well above 15%. The researchers noted that this would lead to deterioration in the trade balance in most countries and would pose a risk for the overall balance of payments, which in turn could adversely affect economic growth.

Papriev and Sodikov [49] used a gravity model to evaluate overland trade expansion in 28 countries, resulting from improvements to the Asian highway network. The study has indicated that the highway network offers major potential for overland trade expansion through upgrading and improvement of the surface condition of selected roads, costing an estimated USD6.5 billion. One scenario of improving road quality indices up to 50 suggests that total intra–regional trade would increase by about 20%, or USD48.7 billion annually. In the second scenario of improving road quality indices up to 75, the predicted increase would be about 35%, or USD89.5 billion annually.

A gravity model-based study for the GMS by Fujimura and Edmonds [50] suggested that the development of cross-border road infrastructure has had a positive effect on intraregional trade in major commodities, with its elasticity in the range of 0.6–1.4. Similar effects on growth in trade were also observed in a study in Eastern Europe [51]. The gravity model simulations suggested that road upgrade could increase trade in the region by 50% above baseline, which exceeded the expected gains from tariff reductions or trade facilitation programmes of comparable scope. In nominal terms, this was about USD45 billion of trade benefits, and the estimated cost for road upgrade was USD8 billion.

The reviewed studies show that improvement of cross-border transport infrastructure can substantially increase transnational trade. However, they do not provide insight into how the growth of trade may affect other aspects of the economy. Only one study refers to the risk for the overall balance of payments due to the deterioration of trade balance. Neither do some studies provide any indication of the transport investment that would be needed. Further studies with a more comprehensive scope would be required to understand the trade-offs among increase in trade, fiscal risks, economic welfare, and other aspects of the economy, including negative effects.

#### *3.3. Rural Economy, Poverty Reduction, and Social Impacts*

People living in rural areas may also gain from major transport networks, especially roads and strategic transport infrastructure, such as a major bridge. Several studies provide evidence of transport networks having positive social impacts on rural people through poverty reduction and increased employment in non-farm activities [14,52–54]. Two studies [14,54] found a structural shift in the rural economy in terms of increase in non-farm activities and more employment.

The NH–5 Highway corridor in Vietnam made substantial positive impacts in the corridor region. The number of households living in poverty dropped by 35% between 1995 and 2000. Cities closer to and further away from NH–5 both experienced higher income growth per capita, as well as faster reduction in poverty than the rest of the country. The poverty rate in Vietnam as a whole reduced by 27% during this period as a result of broader spill overs from NH–5 to other regions [14].

An empirical study by Blankespoor et al. [52] investigated the impact of the Jamuna bridge on Bangladesh. They found that cropping intensity increased by 3% and the area using chemical fertilizer by 7%. The large reduction in transport costs (about 50%) due to the bridge led to agricultural development in the newly connected hinterland as a result of technology adoption and a better match of land to crops. The long-term estimate (2005–2013) was positive and statistically significant, with an increase in rice yield of 5.2%.

Neupane and Calkins [53] examined the status of poverty and income inequality in Southern Thailand along the Asian Highway network route (AH18) in Songkhla province. They used descriptive statistics and Analysis of Variance (ANOVA) method that included poverty and income inequality indices to analyze the household survey data. They found that the average household income varied with location, and poverty was lower along the Asian Highway route.

The impacts of a major National Highway (NH2) in three states in India were analyzed in a study by AITD [54]. Compared with a baseline survey, literacy increased by 6%, female literacy by 12%, school enrolment by 7%, female school children by 12%, and population gaining access to medical facilities by 7%. The study observed improvements in women's participation in the labor force (9% increase), employment in non-agricultural activities (7% increase), and an increase in annual (deflated) per capita income by Rs 243.

Another study found that the welfare impacts on rural people along the GQ highway in India was not similar in all areas [14] (p. 247). The highway reduced poverty significantly in districts with a large agro-processing base, but poverty did not drop in the average district near the highway.

In their study, Fan and Chan-Kang [55] found a trade-off between growth and poverty reduction from road investments in different parts of China. Road investments gave the highest economic returns in the eastern and central regions of China, while contributions to poverty reduction were greatest in western China.

An empirical study in Ethiopia by Minten et al. [56] found that an increase in transaction and transport costs over a 35 km distance led to a 50% increase of the prices of fertilizer and a 75% reduction in its use. The cost to bring fertilizer over a distance of 10 km from the distribution centre was as high as the costs to bring fertilizer to the distribution centre from the port about 1000 km away. The study concluded that tackling the "last mile(s)" costs should thus be a priority.

A study by Omamo [57] in Kenya showed that improved rural road networks that reduce transport costs could reduce the motivation of small farmers to meet food needs through domestic production and promote specialization that raises farm incomes.

Dorosh et al. [58] examined the effects of increases in road investments on travel times and agricultural production. They found that improvements in road infrastructure can facilitate a substantial increase in agricultural production in Sub-Saharan Africa.

The findings of some of the above studies show that transport development leading to improvements in access in rural areas can have direct welfare impacts for the rural people. However, the impacts may vary in different situations and for different groups. On the other hand, transport developments involving HVT corridors and networks are of strategic significance to a national economy, but their direct benefits to the rural people may remain limited unless they are linked with a system of feeder roads providing access to remote areas.

#### *3.4. Equity*/*Inclusive Development, Employment*

Roberts et al. [16] found that transport networks had a beneficial effect on social inclusion in terms of education and gender in most of the studies reviewed. About 75% of studies showed benefits of equality in terms of spatial distribution, though all studies showed substantial negative effects in terms of overall income distribution.

A major study by Donaldson [59] investigated the impact of India's vast colonial railway network using archival data. Donaldson [41] (p. 931) found that "Railroads reduced the cost of trading and interregional price gaps, and increased trade volumes". He (p. 931) also found that when the network was extended to a typical district, real agricultural income in that district rose by approximately 16%.

The findings of Zhenhua and Haynes [60] confirmed that the high-speed railway network in China contributed to decreasing regional economic disparity and promoted regional economic convergence.

The review by Roberts et al. [16] found that roads have a beneficial effect on social inclusion in terms of job creation. More jobs, especially in non-farm activities, and greater participation of women in the labor force were also observed in the AITD study [54].

The rehabilitation and improvement of the Maputo corridor successfully boosted transit trade flows and bilateral trade between South Africa and Mozambique. The Maputo corridor led to more than USD5 billion worth of investments, and 15,000 direct jobs in the construction and operation of transport, logistics, energy, and industrial ventures along the corridor [14].

The NH–5 highway corridor in Vietnam has attracted investment and created jobs. In 2006, 83,453 and 134,846 jobs were generated along the corridor in Hung Yen and Hai Duong provinces, respectively [14].

An International Labor Organization (ILO) study in two states of India (Gujarat and West Bengal) found that investment in infrastructure created a substantial number of jobs [61]. The study found that a 10% increase in the investment in highways and urban road construction sectors (INR2345 million in Gujarat and INR1831 million in West Bengal) led to 83,401 more workers being hired in Gujarat and 178,181 more workers hired in West Bengal. This also led to INR13.52 billion growth in Gujarat and INR14.05 billion growth in West Bengal.

Two studies on the Jamuna bridge in Bangladesh have provided evidence of its impacts on rural employment and job transition patterns, even though they followed different methodologies [44,45]. Blankespoor et al. [62] found that besides increasing employment, the bridge construction facilitated a farm to non-farm shift in employment. About 40% of the employment increase in services came from the reduction of employment in the manufacturing sector, and the rest from agriculture. The results suggest a long-term structural change in the employment pattern.

Mahmud and Sawada [63] also found that the bridge led to an increase in local employment and facilitated a shift from farm to non-farm in both districts. The share of non-farm employment increased from 6.7 to 14% in one district and from 8.6 to 16% in the other district.

A shift in production and labor from agriculture was also found in a study done in Cameroon [64]. The study found that better road access led to a diversification of the economic activities within those households that were most isolated.

The findings of the above studies suggest that transport investment can be an important policy instrument to create jobs and may contribute to decreasing regional economic disparity. However, substantial negative effects on overall income distribution can be expected. The studies do not provide any analysis of how the negative effects on overall income distribution may affect different groups, either in relative or absolute terms. The results of some studies suggest that transport development in conjunction with appropriate complementary interventions, such as in Vietnam, can make substantial positive changes in the economy.

#### *3.5. Location and Spatial E*ff*ects*

While the estimated overall impacts of transport networks are generally beneficial, there are often negative impacts in some country regions and for some groups in society. Dzumbira et al. [65] found differences in the development impacts of the Maputo Development Corridor. Economic impacts, access to services, employment opportunities, income levels, and access to formal housing in nodes along and near the N4 spine were better than those away from the corridor.

In an empirical study on the impacts of railways in colonial India, Donaldson [66] found that the network extended to a typical district increased its real agricultural income, but reduced the real income of its neighboring district without rail access.

A study by the United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) [22] used a CGE model to assess the development impacts of three Asian Highway routes from Kunming, China through Southeast Asia to South Asia. The results showed that, although most country regions would remain unaffected, some regions would have substantial gains in GDP of about 2.2–2.8%. For other regions, the average losses would be small, about 0.3–0.4% in GDP.

Other simulation-based studies have also found an uneven distribution of economic benefits along transport corridors, such as the Dhaka–Kolkata corridor in Bangladesh [14], and the Delhi Mumbai Industrial Corridor (DMIC) in India [67].

In China, the National Express Network (NEN) has increased real incomes in nearby prefectures by nearly 4% on average, but decreased real wages in many prefectures in the urban and rural sector [68]. Other studies also provide evidence of uneven distribution of the impacts of transport networks [14,18,60,69]. This finding from many studies has implications for the planning and design of transport projects.

The major transport networks can motivate businesses to relocate in areas better served by the network. An empirical study in Uganda found that businesses gain more from being located in areas that offer agglomeration economies, availability of skilled workforce, and better infrastructure conditions [70]. Public infrastructure investments in other locations are likely to attract fewer private investors.

To ensure more inclusive development, it is important to understand the distribution of impacts across population groups as well as across geographical areas. The studies discussed above clearly show that the distribution of impacts can be uneven across geographical areas. However, this review did not find any major study that explored the distribution of impacts across different segments of the population. More research would be required to examine the distribution of impacts across different segments of the population for each development outcome and in different situations.

#### *3.6. Cross-Border Facilitation*

De [71] analyzed the effects of inefficient facilitation of trade flow and concluded that transaction costs and delays at borders affect trade flows in the same way as tariffs do. The higher the transaction costs, the less is trade between partners in neighboring countries. A 10% drop in transaction costs at borders increases exports by about 2%.

Intercountry trade in goods and services can be greatly improved with efficient facilitation at border points and improved transit procedures [47,71]. These improvements would boost trade between landlocked countries [72]. However, the gains to countries may not be equal in either relative or absolute terms [21,22].

Stone and Strutt [27] have suggested that welfare gains of USD8.1 billion could be attained from moderate improvements in road infrastructure and trade facilitation in the Greater Mekong Subregion (GMS).

UN ESCAP has developed a corridor performance method that provides information on the relative importance and variability of time and cost at each interface point in a corridor [73]. This method was used to analyze the performance of trade corridors in East and Central Asia, and showed cost details for transport modes and transit time at each border post in the corridors.

Arvis et al. [72] did case studies on cost, time, and reliability of exports on some corridors in LLDCs, focusing on transit traffic for landlocked countries. The researchers concluded that the transit procedures regulating goods were poorly designed and implemented, which discouraged competition and high-quality logistics services.

In recent years, some countries have taken initiatives to streamline their border control and clearance procedures. These include Integrated Check Posts (ICP) by India and a single window system for southeast Asian countries which allows synchronized submission and processing of data, as well as faster clearance and release of shipments. The clearance process at border posts in the Maputo Corridor in southern Africa has also been streamlined. However, the literature does not provide any major studies on these initiatives or their impacts on trade flows and other aspects. Studies on these initiatives can provide important insights into how cross-border facilitation arrangements can be improved and adapted for other situations.

#### *3.7. Corridor Governance*

Transnational corridor development and operation is complex because of their wide reach and scope, and involvement of a large variety of stakeholders. Corridor management can be unique for various reasons, including the historical development of the corridor, initial conditions, and political objectives and institutions in countries along the corridor [72]. As a result, several management structures have emerged, see for example, References [72,74–76]. These structures include:


Many national corridors also have a formal management structure for coordination between government authorities, especially if they are large, multi-sectoral, or multi-modal. Several management structures for national corridors have emerged in India, Malaysia, and other countries [79,80]. These management structures were established under respective national laws; however, their legal status and governance structures are different.

This review finds that most transnational corridor managements have a multi-layer structure, including an apex/umbrella body, an executive/coordination committee, and a secretariat. However, the details of their structures and institutional arrangements vary. National corridors in India, and Malaysia also have multi-layer management structures [79,80].

Legal instruments such as treaties, conventions, agreements, protocols, covenants, compacts, exchange of notes, memoranda of understanding, etc., govern corridor management and operations [77]. Legal instruments can be bilateral, covering two countries, or multilateral, covering many countries along a particular corridor, a subregion, region, or global.

As mentioned above, corridor management ranges from a private sector-led entity operating as a lobby group (such as MCLI) to an intergovernmental body or state-run authority (such as NCTTCA). Each management structure has its strengths and weaknesses, but this review did not find any study that assessed the current management structures. Neither did the review find any study on designing of corridor governance structure, which is important for efficient corridor operation.

Inefficient facilitation arrangements at border crossings is a major deterrent to trade expansion. Corridors in Africa and Asia operate mainly under bi-lateral or sub-regional agreements [77,81]. Some 42 sub-reginal agreements have been signed in Asia alone. However, only some of these are in force. Non-uniformity of these agreements is a major challenge for region-wide trade and movement of traffic. In Africa, for example, multiple corridors cross Tanzania and DRC; these corridors operate under different management structures and their governance instruments are also different, which can lead to inconsistent corridor outcomes and administrative complications. However, studies on these issues are yet to appear in the academic literature.

#### *3.8. Financing and the Private Sector's Involvement*

The public sector has been the main source of financing new transport infrastructure, followed by official development assistance (ODA). For example, in Africa, more than half of transport infrastructure investments were from the public sector; the remaining were through ODA (from the Organization for Economic Co-operation and Development (OECD) and non-OECD countries) and the private sector [24]. Low-income countries (LICs) have not been very successful in attracting private investment in infrastructure development. Only 4% of private-financed projects took place in LICs, while the majority of projects have taken place in developing countries with relatively higher incomes countries [82].

Large gaps between required and available funds are a major challenge for developing transport infrastructure in LICs. Some recent studies have identified substantial investment gaps in infrastructure development. For example, the estimated investment need in South Asia is about 8.8% of GDP, but the current level of investment of about 3.2% of GDP [83,84]. The estimated financing gap for Africa's infrastructure is in the range of USD67.6–USD107.5 billion [85].

More recent data on private investment in infrastructure shows that globally private investment has declined [86]. The same trend has been observed in Asian countries [83]. It is necessary to understand the reasons for the decline in private investment and what can be done to reverse this trend. Given the limited success in implementing private-financed projects, LICs may explore alternative financing options, such as commercial borrowing by the government, issuing of bonds, and other financing modalities that may be available.

#### *3.9. Environment*

There are direct costs of transport development to the environment, such as deforestation, loss of biodiversity, and general degradation of ecosystems [87]. Roberts et al. [16] found that transport networks and corridors have a harmful impact on the environment in terms of deforestation and carbon dioxide (CO2) emission. A study by Laurance et al. [88] provided evidence of road clearings on tropical forests in Central Africa and other regions. A highway across the northwestern Congo Basin has promoted massive logging, poaching, and forest loss.

The transport sector is a major consumer of energy resources and also one of the major emitters of carbon dioxide. Globally, the road sector accounts for most of the energy consumption in the transport sector. In 2010, the transport sector in the UN ESCAP region consumed 27.4% (648 million tons of oil equivalent, or Mtoe) of the sector's total global energy consumption (2362 Mtoe). In the UN ESCAP region, the road sector accounted for more than 80% of the total energy consumption in the transport sector [89]. Compared with the global increase, energy consumption by the road sector in the region is rising more steeply.

In a report by the United States (U.S.) Energy Information Administration [90], it is projected that during the period 2012–2040, the annual growth of the transport sector's energy consumption in Africa (3.1%) and Asia (2.9%) (excluding China and India) will be higher than in other regions.

Globally, transport accounted for one-quarter of total emissions in 2016 (about 8 GtCO2) which was 71% higher than in 1990 [91]. Of this, the share of road transport emissions was 74%. In line with the global increase, CO2 emissions from the transport sector in Asia and Africa also show an upward trend. CO2 emissions in the transport sector in Asia increased from 0.78 GtCO2 in 1990 to 2.44 GtCO2 in 2016, and in the same period, Africa's emission increased from 0.11 GtCO2 to 0.46 GtCO2 [91]. Compared with the global share (24.21%), the share of emission from the transport sector in Asia was much lower (about 14%) but its share in African countries was much higher (39.65%).

The steep rise in CO2 emissions from the sector is expected to continue with further economic development in African and Asian countries. As CO2 emissions is a major source of negative impacts on welfare, greater efforts will be required to reduce the current trend of emission increase from the transport sector.

It may be generally assumed that transport projects will have negative effects on environmental quality outcomes. However, there is a knowledge gap in that the current studies do not provide insight into the trade-offs between economic and social impact outcomes and environmental quality. It may also be pragmatic to consider the environmental impacts of some transport projects from a different perspective, for example, the Delhi–Mumbai dedicated rail freight corridor (DFC). The alternative to DFC would have far more detrimental impacts in terms of CO2 emissions [92]. The authors of Reference [58] estimate that annual CO2 emissions under the low-carbon scenario with DFC (0.28 million tons) are less than one-fortieth under the business-as-usual scenario without DFC (12.32 million tons).

#### *3.10. Congestion and Road Safety*

Traffic congestion is an important source of welfare loss in almost all major developing countries. An Asian Development Bank report suggests that road congestion costs countries in the region about 2–5% of GDP every year, due to lost time and higher transport costs [93]. Congestion also has other negative impacts on the welfare of people. The major cities in Asia suffer from the highest air pollution levels in the world, about 80% of which is from transport. Kuala Lumpur, the capital city of Malaysia, has serious traffic congestion. According to a World Bank report [94], the city wastes 1.2 billion L of fuel on traffic congestion, which is about 2% of GDP. The results of a study show that the traffic congestion cost in Beijing was about RMB 58 billion (4.22% of GDP) in 2010 [95]. The estimated annual congestion cost in Dhaka in Bangladesh was USD3868 million, which included an environmental externality cost of USD375 million [96]. Similar congestion cost estimates for some African cities are also available.

The TomTom traffic index, a measure of traffic congestion, shows that in 2018, some of the most congested cities in the world were in Asia (Mumbai, Delhi, Jakarta, and Kuala Lumpur, for example). In Africa, except Cairo and Lagos, the other most congested cities were in South Africa [97]. Measures to reduce the congestion level can greatly help to reduce its adverse impacts on the environment and people's welfare.

The road traffic death rate is highest in Africa (26.6/million people) followed by south and southeast Asian countries (20.7/million people). In both regions, the death rate has increased compared with 2013. The burden of road traffic injuries and deaths is disproportionately borne by vulnerable road users and those living in low- and middle-income countries [98]. In addition to a public health problem, road traffic injuries are a development issue. Low- and middle-income countries lose approximately 3% of GDP as a result of road traffic crashes [99].

The LICs have about 9% of the world population and their vehicle population accounts for only 1% of the total vehicles but they share 13% of total road deaths in the world. The LICs in Africa has the highest rate of road traffic deaths in the world of 29.3 per 100,000 population [98]. The low standard and poor condition of most roads and inadequate/lack of road infrastructure facilities in most low- and middle-income countries in Africa and Asia are among the causes of high road traffic fatalities.

An analysis of the 2010 road safety data covering 34,370 km of highways in 23 countries, available in the Asian Highway database, clearly shows that the higher class of roads are generally much safer than the lower class of roads [89]. A number of safe road demonstration corridor projects are being implemented in many states of India and other countries. A preliminary analysis of some of these safety improvement projects finds similar results. For example, the Kadapa to Renigunta safety demonstration corridor project implemented under the Andhra Pradesh & Telangana Road Sector Project (APTRSP) in India shows impressive results. The locations where curves and junctions were improved saw a 53% reduction in road crashes and 42% reduction in fatalities [100]. These results show that significant improvement in road safety can be achieved through the upgrading of highways and safer road infrastructure design.

#### *3.11. Tra*ffi*cking, Spread of Disease, and Socio–Political Issues*

Cross-border transport infrastructure is accompanied by a wide range of negative externalities, such as the spread of HIV/AIDS, trafficking of vulnerable groups, particularly women and girls, illegal trading of narcotics and other items, effects on local farmers and businesses, and erosion of social values and cultural identities. As a result, the perceptions of local people in border areas may not always be favorable to cross-border infrastructure [101–103].

Trafficking of women and girls is a serious problem in border areas of countries in South and South-East Asia. Deane [104] examined cross-border trafficking of women and girls from Nepal to India. This study cited different sources to estimate that 7000 to 10,000 girls between the ages of 9 to 16 years are trafficked each month from Nepal to India. The trafficking problem between other countries has been examined in other studies [105,106].

Cross-border transport infrastructure can also have other adverse social impacts on the local people. Günther Slesak et al. [107] reported alarming vulnerability rates in ethnic minorities to sexually transmitted diseases (STDs) and HIV/AIDS along a new major intercountry road in south-east Asia. A review by Regondi et al. [108] found evidence of the spread of HIV/AIDS along the road network in Southern Africa. The number of HIV-positive persons and AIDS patients increased sharply in Savannakhet in Lao People's Democratic Republic during the construction of the Second Mekong Bridge [103].

Some of the above externalities are deeply rooted in the problem of widespread poverty, especially in remote border areas. Along with direct intervention measures, other measures to reduce poverty in the border regions would also be necessary. However, apart from trafficking and the spread of diseases, the literature does not provide insights into other social issues. Displacement and marginalization of local communities, including indigenous people, are possible due to land appropriation and grabbing, and changing social structure along the corridors, especially in border areas. However, the review did not find any study on these social issues. The review also did not find any study on mitigation practices to counter the negative impacts of cross-border transport.

#### **4. Discussion**

For the convenience of discussion, a summary of the main impacts of transport infrastructure investment, discussed in Section 3, is presented in Table 1.

The outcomes or impacts of transport infrastructure development are generally positive on economy, income, poverty, employment, equity, and inclusion. However, there can be important trade-offs between economy and welfare and impacts on environmental quality. In some situations, there can even be trade-offs between economic growth and poverty [55]. In addition, the distribution of impacts can be uneven. To ensure more sustainable and inclusive development, the potential gains to economy and welfare must be balanced against the potential adverse impacts, and the gains should be more equitably distributed.

An important limitation of the current studies is that they are not comprehensive in scope, generally focused on some specific outcome, for example, economic growth, trade, etc. Comprehensive studies which consider the impacts of specific transport projects on all aspects of outcomes, including negative externalities, simultaneously would be useful to gain insight into the nature of trade-offs between different outcomes. Further research is also required to understand the uneven impacts across geographical locations and population groups for different types of infrastructure, and complementary policies, interventions, and institutions that can be considered to alleviate the adverse effects of uneven impacts. Findings of these studies can help when considering the choice of appropriate interventions and institutions which may then become part of the planning and design of HVT corridors and networks.

Transport development is necessary but may not be sufficient to generate wider economic benefits. Additional complementary interventions may also be required. For example, in the case of GQ Highways in India, non-availability of land for non-farm uses and low education and skills of the local labor force were found to be the main constraints for wider sharing of socio–economic benefits of the highways in some districts [16]. It also shows that transport investments and complementary policies should be based on a better understanding of the underlying mechanisms and the initial conditions that may affect the development outcomes. Otherwise, there is a risk that transport investments may not always produce the expected outcomes.


**Table 1.** Summary of main impacts from the reviewed literature.


**Table 1.** *Cont.*

The NH–5 highway corridor in Vietnam is a good example of complementary interventions. The highway development was implemented in conjunction with complementary policies, including human resource development. The availability of an educated labor force allowed quick transfer of labor from agriculture to manufacturing and helped a major transformational shift in the economy [14]. The Maputo Corridor in Southern Africa is another good example where infrastructure rehabilitation and upgrading of transport infrastructure, along with improved facilitation measures at border posts, made the corridor successful in boosting transnational trade.

The review showed that HVT corridors and networks can create agglomeration effects in some locations. Businesses gain more from being in areas that offer agglomeration economies. Public infrastructure investments in other locations are likely to attract fewer private investors. Because of agglomeration benefits in established main centres, investment only in transport infrastructure has limitations to attract businesses to secondary centres outside the established main centres. Other intervention measures, such as public investment and policies, may be needed to induce growth in less attractive secondary centres or regions.

The burden of environmental and social costs of transport can be substantially reduced through various measures. For example, road safety is an important development issue in both SSA and South Asian countries, and should not be left as an "afterthought" in road infrastructure development projects. Although road safety is a cross-sectoral issue, evidence from the review suggests that the incidence of road crashes can be substantially reduced through road development with proper road safety audits at the road design stage.

Even though Environmental Impact Assessment (EIA) is now customary, further research may be necessary to guide the planning of transport infrastructure projects in environmentally sensitive areas. Other measures, such as the development of multi-modal transport systems, where possible, can substantially reduce the negative effects (see, for example, References [92,109]). Price instruments (congestion and pollution charges, for example) and regulations (such as emission and fuel standards) are useful tools to change the behavior of individuals and firms and address environmental externalities. However, the use of these tools is not common in LICs. They should be considered to reduce the burden of negative externalities, where feasible.

To improve transport project evaluation in developing countries, it would be worthwhile finding out if the same categories of WEBs, as in developed countries, are also important for developing countries. Further studies with such a focus, as well as developing suitable estimation methods for WEBs, would be needed.

Researchers have used a variety of models and methodologies to study the impacts of transport development, including CGE-based simulation studies, multi-regional input–output (IO) model, and difference-in-difference and other statistical and econometric models. Models based on CGE and IO methodologies are promising for estimating transport infrastructure investments and their distributional effects. Theoretically, the CGE and structural models are superior to other models. However, the structure and application of such models are still in the developmental stage. They are more complex, data-intensive, and require considerable expertise. Further efforts would be required to develop operational models for practical applications.

Research studies may also be considered to assess the effectiveness and suitability of the currently available analytical tools/models to understand the distributional impacts of regional and national transport projects/networks at the subnational level. Research is also needed to examine how such tools/models may be adapted for policy analysis and policy formulation, including designing of complementary intervention measures. A related issue in developing practical models for impact assessment is the availability of required data. The suggested research may also examine how this problem can be overcome.

Several corridor management structures have emerged. The review did not find any study on the assessment of the current management structures. An assessment study can provide valuable insights into the current structures and contribute to designing new and improving the current management structures. Therefore, a study on this matter is recommended.

There is another issue linked to management structures: the governance of transport corridors. Currently, there is no general framework for designing governance structures for transport corridors. Research may be considered on how a transport corridor governance structure can be organized, structurally and procedurally, so that multiple stakeholders in corridor development, management, and operation can play their roles and interact effectively. Allied to this, the research may also consider how governments can promote institutions to build partnerships, collaboration with such actors, and facilitate their action.

The establishment of functional linkages between local and rural communities and the urban/national economy by using major highways and railways is a major challenge. In addition to rural feeder road networks, some countries have considered rural logistics and market centres along the major transport networks and other intervention measures to improve efficiency in rural supply and distribution chains, serve as a direct market outlet for local produce, and generate non-farm local employment [110]. However, these initiatives are not widespread and do not follow a coordinated approach to establish effective rural–urban linkages. A study can be considered to develop case studies on such measures, and assessment for their adaptation in other countries.

The negative externalities of cross-border transport need closer attention. Human trafficking, illegal trade in narcotics and other items, and the spread of diseases are some of the major challenges that need to be tackled through appropriate interventions. Other social issues related to corridor development, such as displacement and marginalization of local communities, changing social structure, etc. need the attention of researchers. Research may be undertaken to study these problems in operational corridors. The study may also consider the effectiveness of the current mitigation measures, develop a general framework to formulate action plans for remedial measures, and examine how these measures may be incorporated in corridor project design, as well as in legal and regulatory instruments for border-crossing procedures.

Railways are expected to have a greater role in the future to meet the growing demand for transport infrastructure services. In recent years, many countries in South Asia and SSA have been building new railway lines. In addition, freight movement by railway is expected to be a key design feature of multimodal transport corridor projects in the future. However, evidence of the impacts of rail transport in the literature is not rich. A better understanding would be needed for designing economically and environmentally efficient and socially inclusive railway projects. Studies are suggested on impact evaluation of recent railway projects, including both passenger and railway freight corridors, which some countries are currently constructing.

**Funding:** This research was funded by UK AID through the UK Department for International Development under the High Volume Transport (HVT) Applied Research Programme, managed by IMC Worldwide.

**Acknowledgments:** This research was funded by UK AID through the UK Department for International Development under the High Volume Transport (HVT) Applied Research Programme, managed by IMC Worldwide. The author is particularly grateful for the helpful comments and advice of Bruce Thompson, the leader of Theme 1, Long Distance Strategic Road and Rail Transport, of the HVT Programme.

**Conflicts of Interest:** The author declares no conflict of interest.

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