49452-001: Scoping Potential Economic Corridors in Pakistan | Asian Development Bank

Pakistan: Scoping Potential Economic Corridors in Pakistan

Sovereign (Public) Project | 49452-001 Status: Closed

In February 2015, the Asian Development Bank (ADB) and the Government of United Kingdom Department for International Development (DFID) agreed upon a Pakistan Economic Corridors Program (PECP) to support the government's strategy to strengthen regional connectivity and trade, accelerate economic growth, and create jobs. The program comprises (i) significant investment in transport, (ii) investment and technical assistance (TA) to promote public private partnerships (PPPs), and (iii) TA to support transport sector policy and economic corridor planning. DFID will contribute up to GBP 262 million of grant co-financing for ADB's operations in these areas. ADB will act as administrator of the 5-year program from March 2015 to March 2020.

Project Details

Project Officer
Noshab, Farzana Central and West Asia Department Request for information
Country
  • Pakistan
Modality
  • Technical Assistance
Sector
  • Industry and trade
 
Project Name Scoping Potential Economic Corridors in Pakistan
Project Number 49452-001
Country Pakistan
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 9094-PAK: Scoping Potential Economic Corridors in Pakistan
Government of the United Kingdom US$ 215,000.00
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Industry and trade / Industry and trade sector development

Gender Equity and Mainstreaming No gender elements
Description

In February 2015, the Asian Development Bank (ADB) and the Government of United Kingdom Department for International Development (DFID) agreed upon a Pakistan Economic Corridors Program (PECP) to support the government's strategy to strengthen regional connectivity and trade, accelerate economic growth, and create jobs. The program comprises (i) significant investment in transport, (ii) investment and technical assistance (TA) to promote public private partnerships (PPPs), and (iii) TA to support transport sector policy and economic corridor planning. DFID will contribute up to GBP 262 million of grant co-financing for ADB's operations in these areas. ADB will act as administrator of the 5-year program from March 2015 to March 2020.

Within TA provision under the PECP, a small-scale policy and advisory technical assistance (S-PATA) is proposed to identify potential economic corridors to enhance trade, regional connectivity, growth and job creation. The outcome will be identification of viable economic corridors for further assessment and planning under a subsequent larger TA, which will detail policy actions and investments along the corridors to achieve their potential.

The outputs of the S-PATA will consist of:

(i) A final report with prioritization of about 4 potential economic corridors that have synergy with government plans (including CPEC), and ADB investments, starting with the investments under PECP. The latter investments include the M4 motorway linking Faisalabad and Multan in central Punjab, the N70 and N50 national highways linking Balochistan with the rest of the country, and the E35 expressway from Islamabad to Mansehra in Khyber Pakhtunkhwa and onward to China and the Central Asian Republics.

The report will provide the rationale for selection of each of prioritized corridors, including a description of (a) alignment with government plans; (b) the nodes along the corridor, their characteristics in terms of population size and density, the nature of economic activities, and other relevant economic and social indicators; (c) the nature and extent of connectivity between the nodes related to transport, communications, transport and trade facilitation, etc.; and (d) an initial assessment of economic thrusts for each corridor, and their strengths and weaknesses.

The report will also outline (a) methods (e.g. econometric models, value chain analyses, focus group discussions, among others) required for further detailed assessment of prioritized economic corridors under the larger TA; (b) an assessment of existing sources of national and provincial data and gaps that could be filled, e.g. with geographic information systems and surveys; and (c) design of surveys as appropriate.

The report will identify key government agencies and other main stakeholders involved in the development of selected corridors and mechanisms for institutional coordination during the formulation and implementation of the subsequent larger TA.

The report will describe potential challenges and mitigating measures for the development of selected corridors.

(ii) Agreement among the government agencies and other main stakeholders identified above on the corridors selected and prioritized for further detailed assessment.

The outputs will be based on extensive consultations with key stakeholders, including the main government agencies with responsibilities for aspects of corridor development, key private sector representatives (financiers, producers, suppliers, distributors) active along the corridor, research institutes and non-government organizations, potential representatives of communities along the corridors, other development partners with an interest in corridor development, as well as relevant ADB sector experts (transport, urban, agriculture, energy, public sector management, industry, finance, trade and others as necessary).

Project Rationale and Linkage to Country/Regional Strategy

The proposed S-PATA aims to identify a few viable economic corridors in Pakistan for subsequent detailed assessment under a larger TA. The S-PATA is aligned with ADB's country partnership strategy 2015-2019 for Pakistan (CPS) and is included in the ADB's Country Operations Business Plan 2016-2018. The proposed S-PATA is complementary to ADB's ongoing support to Pakistan for infrastructure and institutional development, including in energy, agriculture, urban services, and, as noted above, in transport and PPPs.

Pakistan's macroeconomic environment has improved since fiscal year (FY) 2013, with the increase in foreign exchange reserves, smaller fiscal deficits, and low inflation (footnote 1). The rate of economic growth also rose to a provisional 4.2% in FY2015, but remains below the estimated 7% rate required to create sufficient jobs for a rapidly expanding labor force. Over the years, the poverty rate has declined, but substantial regional disparity exists in poverty between rural and urban areas and among provinces.

Development of corridors to promote inclusive economic growth and raise living standards is a key priority of the federal and provincial governments in Pakistan. The government's national plan, vision 2025, envisages development of economic corridors, comprising energy, industry, trade and transportation to be beneficial reflecting the country's strategic location at the intersection of south, central, and west Asia. The strategies of provincial governments also emphasize development and management of urban areas and economic nodes, connectivity among them, and promotion of agriculture, industry and/or services in them. The initiatives include the China-Pakistan Economic Corridor (CPEC) at the national level, and new industrial estates, economic zones, transport systems, urban development, and promotion of agriculture and services in the provinces.

Economic corridors connect economic agents along a defined geography, using transport and communication to link economic nodes or hubs, usually centered in urban landscapes, with smaller nodes that may exist in between them, and the land surrounding the corridor in its vicinity. Viable corridors require that the nodes linked by the corridor are substantive centers of actual or potential economic activity.

Some of the considerations in corridor development include current concentrations of population in different nodes along the corridor; endowments of natural, physical and human resources; existing and potential economic activities in the nodes; connectivity among the nodes; patterns of rural-urban migration; and investments (e.g. in infrastructure) and policies required to develop the corridor. In Pakistan, the necessity for the government's continued fiscal consolidation, insufficient public sector resources available for investment, limited capacity in government agencies, and the need for coordination among different agencies, mean that the success of corridor development will depend on feasible plans that take these constraints into account. Promoting private sector participation in the planning and implementation and realizing private sector investment will be crucial factors for success.

Impact Development of economic corridors to enhance trade, regional connectivity, growth and job creation.
Project Outcome
Description of Outcome Potential economic corridors selected for detailed assessment and planning under a subsequent larger TA.
Progress Toward Outcome Reports analyzing five key aspects of economic corridor development (ECD) along the existing and upcoming transport corridors in Pakistan have been finalized based on extensive stakeholder feedback. The thematic ECD issues include: (i) economic perspective; (ii) institutional and regulatory environment; (iii) empirical analysis of economic corridor indicators; (iv) multi-dimensional aspects of poverty, inclusiveness & gender; and (v) role of diaspora in economic corridors.
Implementation Progress
Description of Project Outputs A final report with prioritization of about at least four potential economic corridors.
Status of Implementation Progress (Outputs, Activities, and Issues) Five individual reports on key thematic aspects of ECD and one consolidated TA report were prepared as a basis for a comprehensive study of economic corridors under a subsequent KSTA 9488: Supporting ECD through Strategic Planning Frameworks, which was approved in December 2017.
Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Consultation was held with the government agencies, private sector and development partners, particularly funding partner UK-Department for International Development (DFID) on the wider Pakistan Economic Corridors Program (PECP), as well as government officials and academics to outline the scope of the S-PATA and set project outline for subsequent larger TA.
During Project Implementation Both international and national consultants were mobilized to share expertise on global best practices, as well as to provide local-context relevant experience on key aspects of economic corridor development. Focus group discussions (FGDs) were held at the provincial level in Faisalabad, Multan, Abbottabad, Lahore and Quetta with various government and business stakeholders to gain feedback on potential regional-specific opportunities and challenges of economic corridors. A series of workshops were held in Karachi, Lahore and Islamabad during November-December 2017, to present preliminary findings from the thematic reports and gather important stakeholder input on the subject, which is reflected in the final draft reports.
Business Opportunities
Consulting Services

International and national consultants have been mobilized to share expertise on global best practices, as well as to provide local-context relevant experience on economic corridor development. Five consultants are responsible for drafting five individual thematic papers on key aspects of economic corridor development:

1. Regional Specialist/Economist for paper on Economic Aspects of Corridor Development;

2. Economist/Sociologist for paper on Institutional and Regulatory Environment;

3. Econometrician/Economist for paper on Empirical Analysis of Economic Corridor Indicators;

4. Economist/Diaspora & Migration Expert for paper on Role of Diaspora;

5. Economist/Poverty and Inclusiveness Expert for paper on Multidimensional Aspects of Economic Corridors.

Additionally, a Research Associate has been mobilized to support the work of the thematic experts and coordinate FGDs/workshops; a Senior Advisor has been mobilized to disseminate preliminary findings during the provincial workshops and ensure active feedback/input from stakeholders for the subsequent, larger TA. Resource persons will be targeted to ensure relevant participation during the workshops.

Responsible ADB Officer Noshab, Farzana
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Pakistan Resident Mission
Executing Agencies
Asian Development Bank
6 ADB Avenue,
Mandaluyong City 1550, Philippines
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 16 Mar 2016
Last Review Mission -
Last PDS Update 18 May 2018

TA 9094-PAK

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Mar 2016 - 16 Mar 2016 31 Aug 2016 31 Dec 2017 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 215,000.00 0.00 0.00 0.00 0.00 215,000.00 16 Mar 2016 181,331.95

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