FROM THE TRANSPORT CORRIDOR TO THE ECONOMIC ONE Iwao Ohashi

ment potential is not limited to the use of domestic resources and the expansion of domestic markets, it also aims at the strategic use of one’s own space in the intercontinental development context – with the introduction of the factors of economic growth of neighbouring countries into one’s economy. The development of an international transport corridor is one of the most useful elements in this direction. It is important to develop roads and container railways connecting China and Western Europe through the Russian space. As a prerequisite for this, it is necessary – despite the current turbulent international geopolitical situation – to have the prospect of a stable development of trade relations between the countries of Europe (primarily Germany) and China. In this context, it is envisaged to strengthen economic partnership and deepen connectivity – through the maintenance of friendly relations between China and the EU, the mutually bene cial realization of cooperation projects within the framework of the China initiative ”One Belt and One Way” as well as through

SIX CORRIDORS AND ONE MARITIME ROUTE OF INTERNATIONAL ECONOMIC COOPERATION WITHIN THE FRAMEWORK OF THE CHINESE INTUITION ”ONE BELT, ONE WAY”

RUSSIA

Corridor “China – Mongolia – Russia”

KAZAKHSTAN

MONGOLIA

Corridor “New Eurasian Intercontinental Bridge”

Corridor “China – Central Asia – West Asia” CHINA

ИРАН

Corridor “China – Pakistan” Corridor “China – Pakistan”

Corridor “China – Myanmar – India”

Corridor “China – Indian Ocean – Europe” INDIA

Corridor “China – Indo-China”

the development of dialogue between the Eurasian Economic Union, China and the European Union in the context of the ”Lisbon-Vladivostok” initiative.

Russian national interests In assessing how advantageous the establishment of an international transport corridor in Russia can be for its own socio-economic development, it should be noted that the creation of such a corridor is only a necessary condition, not a su cient one. The creation of a corridor and the strengthening of economic connectivity through it will primarily bene t foreign initiators. In other words, the greatest bene t from the establishment of an international transport corridor between China and Europe is the consumers (in both markets) of the goods to be imported and exported, as well as the countries with the highest value added in the development chain, production and sale of these goods. This is the case, for example, of branded high-value-added products developed and manufactured in Europe being placed on the Chinese market, or of products containing advanced European components, gathered in China and go back to the European market. Here, it is China and Europe that stand to bene t most from the operation of the international transport corridor through the EAEU, including Russia. In such cases, the potential source of revenue for Russia and other EAEU countries will be limited to road freight charges and container services.

From the European and Chinese point of view, the Eurasian International Transport Corridor is an instrument for maximizing e ciency and facilitating trade between them. This is in line with the realization and promotion of their own national interests. Naturally, there is no particular prospect for safeguarding the national interests of the EAEU or Russia. If such interests are to be fully realized, Russia must take a strategic approach in order to ensure its own bene t. On the other hand, there is also no contradiction in the development of the Eurasian international transport corridor between maximizing the national interests of Russia and enhancing the national interests of Europe, China and other EAEU member States. Rather, the more active Russia is, the more likely it is that its economies and those of other interested countries will bene t more.

It means the necessity to develop along a corridor, which is regarded as a line performing transport and logistics functions, a belt-shaped space where value added would be intensively created. In other words, the strategic development of the belt along the international transport corridor as a space creating added value through the active use of the e ects of the transport corridor would lead to the maximum realization of Russia’s national interests.

But the question arises. If railways and roads are built, will the development of the surrounding areas also take place through the free activities of entrepreneurs and investors on the basis of a market mechanism? Probably yes. However, this approach will not always have the greatest impact. In fact, the creation of value-added spaces and territories is often promoted through a deliberate, strategic approach in line with a de ned vision and concept of integrated development. This is the concept of the development of the ”economic corridor”. An economic corridor is an approach to integrated strategic regional development, creating a sustainable and strong growth potential through the creation of an e ective cycle of investment promotion and expansion of markets through the revival of economic activity based on a certain capacity for industrial development and the development of physical and institutional infrastructure regions, where the main trunk line (transport corridor) is the axis of strategic development.

In fact, any corridor must be created in a favorable business and investment environment, based on a free and open market mechanism. But beyond that, the political will of the State and the vision, concept and strategy to promote development shared by the State, business, people and experts are essential to such an approach. The concept and strategy must be complex, integrated and systematic. Importantly, 3 dimensions – trunk infrastructure development, an industrial development strategy and an urban environment strategy – must be integrated into a common vision for strategic development.

In the context of the strategic development of Russia we often encounter the aspiration to development by creating a ”growth point”. However, given the vast territory of Russia and the persistent lack of necessary nancial resources, dy-

А CONCEPTUAL FRAMEWORK FOR THE INTEGRATED DEVELOPMENT OF THE REGIONS ACCORDING TO THE CORRIDOR APPROACH

Long-term development vision

Inter-regional balance

Open-ended planning process

СORRIDOR INFRASTRUCTURE DEVELOPMENT PLAN

Regional industry development strategy

Social and urban infrastructure development strategy

Environmental and social considerations Investment promotion

Human resource developmen

Benefits to local communities

”PACIFIC BELT,” WHICH FUNCTIONED AS THE AXIS OF STRATEGIC DEVELOPMENT OF JAPAN DURING THE RAPID GROWTH OF THE 1960s AND 1970s

namic growth with such an approach is often di cult, especially if each point of growth focuses exclusively on its own development and does not create synergies with other points. On the other hand, the Economic Corridor Initiative is an approach aimed at the intensive development of a country and regions through the deployment of growth points along the strategic development axis, with the aim of achieving precisely synergistic effects with each other.

Economic Corridors – Foreign Experience Is it feasible to achieve strategic development with such an approach? As far as we know, there are no regions in modern Russia that have achieved development with a clear concept of an economic corridor. But the development of economic corridors can be observed in di erent countries and microregions of the world, especially in Asia.

The most familiar for us Japanese, the development experience according to the concept of the economic corridor is ”Paci c belt”. The concept aims to disperse industrial capacity, which has been excessively concentrated in regions around major cities on the same line as Tokyo, Nagoya, Osaka and KitaKyushu, as well as achieving balanced development between regions through the development of other cities a belt-shaped industry centre. Along this line through the e cient use and optimal allocation of the country’s limited capital, labour and technology resources.

In order to decentralize industrial capacities, the Government of Japan gave priority to the implementation of major infrastructure projects such as the ”Tokyo-Nagoya” and the ”Nagoya-Kobe” Expressways and the ”Shinkansen” Superhighway (at the time) connecting Tokyo, Nagoya and Osaka. This integrated strategic development approach has enabled the Japanese economy to develop high-value-added export-oriented products. Thus, since the 1960s, the country has successfully implemented structural reforms, resulting in high economic growth.

A typical example of an economic corridor, the realization of which started in the rst decade of this century, is the industrial corridor ”Delhi – Mumbai” (DMIC) in India. It is India’s rst initiative for integrated regional strategic development. The concept is to advance the development of large production and logistics clusters by establishing a highspeed freight railway linking Delhi and the port city Mumbai, and to create an environment conducive to the revival of

DELHI DELHI – MUMBAI INDUSTRIAL CORRIDOR(DMIC)

MUMBAI INDIA

© Ministry of Industrial Development and Foreign Trade of India

economic activity, building on the work of industrial parks, technological parks, logistics centers, power plants, etc. In a belt-shaped area along a railway covering seven regions.

The projected level of investment in this corridor will reach $90 billion, with three million new jobs. The key point of this concept is that not only is the development of a transport corridor envisaged, but also, taking into account the maximization of synergies, expansion and enhancement of local production capacity by actively attracting investment along the corridor between the metropolitan area, which is the largest consumer market, and the seaport on the Indian Ocean coast. In this regard, India has established a PPP partnership with Japan and has succeeded in involving many Japanese companies in localization projects in the respective 7 regions.

In the last decade there has been signi cant progress in the creation and development of the ”Greater Mekong” economic corridors, the prototype of which was developed in 1992. As an extension of the concept of an international economic cooperation program in the Greater Mekong Macro Region, comprising Thailand, Cambodia, Laos, Myanmar, Vietnam and China (Yunnan Province and Guangxi Zhuang Autonomous Region) since 2000, the territory has been developing economic corridors. Three main economic corridors were aimed at integrated development: ”East – West” connecting Vietnam and Myanmar; ”North – South” connecting Thailand and the city Kunming in China, as well as the northern part of Vietnam; ”South” corridor connecting Thailand and the southern part of Vietnam.

The process of integrated development of economic corridors includes not only the development of transport infrastructure that facilitates the integration of economic centres in the macro-region, as well as a number of measures to facilitate import and export procedures and customs clearance at border crossings. It is also expected that the multimodal logistics centres established along these corridors will function as international transhipment hubs, not only for trade within the macro-region, but also to interact with the markets of South, South-East and East Asia. In addition, the e ective development of economic corridors is expected to lead to increased localization of goods production through the creation of industrial parks and special economic zones along the trunk infrastructure. Resulting in social drivers the macro-economic development of the region will expand from coasts to inland areas.

Integrated corridor-based development is also being applied in underdeveloped regions of Africa. One example is the strategy for the creation of the economic corridor ”Nacala ”, the goal of which is the leading development of the northern regions of Mozambique. The strategy envisages the integrated development of the regions through active private investment in the mineral (especially coal) and agricultural sectors of the regional economy (using abundant local water resources).

The development will be based on the modernization of trunk roads and railways, as well as the establishment of a modern seaport as an international trade hub. As part of the corridor development strategy, program will be developed for agricultural water supply and industrial water supply, electricity and communications, special economic zones, industrial parks, logistics parks and transhipment terminals, as well as program to promote tourism, agricultural production, human resources and regional branding. At the same time, it should be noted that some problems have been encountered in the implementation of this strategy. Many local farmers objected to large-scale acquisitions of cultivated land by large international investors, which could lead to the destruction of the traditional (though low productivity) farming system. Similarly, the introduction of a regional development corridor approach may raise concerns that large non-local investors may seize and monopolize local wealth. In developing the corridor, therefore, special emphasis should be placed on the sustainable management of national and regional interests through consensus-building among authorities, investors, policy makers and the population on the strategic development of the regions.

ECONOMIC CORRIDORS IN THE ”BIG MEKONG” MACROREGION

© Secretariat of the Greater Mekong Subregion

NAKALA DEVELOPMENT CORRIDOR

Конго CONGO

Замбия ZAMBIA Малави MALAWI

Зимбабве ZIMBABWE

© Ministry of Planning and Development of the Republic of Mozambique

Танзания TANZANIA

CORRIDOR DEVELOPMENT STRATEGY TARGET REGIONS

Мозамбик MOZAMBIQUE

Prospects for the development of an economic corridor in Russia In recent years, China has promoted the implementation of the ”One Belt and One Way” initiative, which proposes the development of six economic corridors in the Eurasian continent. For China, the aim of the corridors is to deepen the integration of European and Asian markets. It is assumed that two of these corridors will connect China and Europe through the territory of Russia: the economic corridor ”China – Mongolia – Russia” and the ”New Eurasian Intercontinental Bridge”. With regard to the rst, a tripartite development program had already been formulated. Regarding the second, there are common elements with the two international transport corridors of Russia – ”Western Europe – Western China” and ”Meridian”, and as an example, it will be interesting to pay attention to the latter, which is currently moving towards realization.

The ”Meridian” project, also known as the construction project of the highway ”Shanghai – Hamburg”, is aimed at connecting border points of Kazakhstan and Belarus through 8 regions of Russia. On this highway, in addition to the maximum speed permit, the weight and length of trucks with containers will be relaxed to international standards. In this way, it will be possible to provide a large number and a short timeframe for transport between Europe and China, which will bring enormous bene ts to importers and exporters. For Russia, however, this limits are the main bene t, which will only come from the revenues generated from the payment of truck fares on the highway and the provision of various transit services. Here, strategic evolution of ”Meridian” from the international transport corridor to the corridor of complex economic development may lead to maximization of national interests of Russia.

The development of this corridor, which passes through the southern part of the CFD, as well as the regions of the Middle-Lower Volga River, has the potential of a unique opportunity of complex development of the involved regions. In the experience of other countries, the creation of an economic corridor can attract investment in economic activities along and around the backbone by increasing demand and, as a result, increasing the nancial viability of projects. In this context, it will be possible to enhance radically the investment attractiveness of the regions along the corridor by locating investment projects and infrastructure in industries such as food processing, Agricultural logistics, details and spare parts, creative goods processing and tourism, as well as improving the urban environment in a way that creates synergies between projects. With the integrated development of transport and economic corridors, the production functions of the regions along them will be integrated into the global value chain of international corporate activities.

Also through the strategic transformation of the international transport corridor into an economic e ect, the visualization of the development prospects of the respective regions is expected. This will raise expectations of a gradual increase in land prices in these regions and thus increase the possibility of nancing investment projects using land and other assets as collateral.

According to the Asian experience, funds for the construction of infrastructure facilities for the development of the corridor can be raised not only from revenues from tolls on the highway, but also by creating a mechanism for integrating the interests of di erent actors in the process of integrated development of adjacent territories.

In the light of all this, how everything will turn out in the future depends largely on Russia.

Ulf Schneider,

Member of the Supervisory Board of FBA EAC, Chairman of the Board of Business Initiative Lisbon–Vladivostok, President & Founder, SCHNEIDER GROUP

CONVERGENCEBETWEEN EU AND EAEU – MORE THAN ECONOMIC BENEFIT

According to solid academic studies, the EU could increase its exports to the countries of the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia) by more than 50 per cent, if there were a comprehensive trade agreement between the two unions. The other way round the numbers look slightly lower, however, also signi cant. The economic bene ts are obvious, but close economic co-operation between the EU and the Eurasian Economic Union (EAEU) would have advantages that go much beyond economics. An agreement would not only o er a strong statement in favour of multilateralism and against growing protectionism, but it would also provide an anchor of stability for an era of the next generation, and it would contribute to bringing the Chinese-led Belt & Road Initiative into better balance.

Take opponents’ arguments seriously Frequent arguments against o cial cooperation between the EU and the EAEU are Russia’s dominance among the ve EAEU countries, that Minsk II must rst be implemented, and that Russia must stop its protectionism. It is also often said that the U.S. is against such an economic space, or at least that Poland and the Baltic States oppose it.

There is no doubt that Russia is practicing some protectionism. However, it is similar to that of the U.S. (and this may not change with the new U.S. administration) and China and, to a certain extent, of the EU. Talks with the EAEU would help to reduce protectionism. Politically, the U.S. would not welcome an economic space from Lisbon to Vladivostok. Europe did not interfere with new USMCA agreement (previously NAFTA), even though USMCA is a clear example of the law of the strongest, not the strength of the law.

Political and economic stability in the EAEU-countries Since 2015 both European and Eurasian business in its Initiative Lisbon-Vladivostok promotes the creation of a common economic space within the borders of EU and EAEU. Such an agreement of the EU and the EAEU would also greatly increase the importance of the Eurasian Commission. In the event of the retirement of important politicians of the EAEU-countries, a strong Eurasian Commission could help to smooth an orderly transition to successors and have a positive impact on economic and societal development.

Europe’s answer to the Chinese New Silk Road One of the questions commonly raised is how the Lisbon-Vladivostok project relates to the Belt and Road Initiative. The answer is simple: it is not in competition, but rather it is the logical European-Eur-