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GREAT insights Magazine

Corridors as industrial policy? Linking people, policies and places

June 2015

Byiers, B. 2015. Corridors as industrial policy? Linking people, policies and places. GREAT insights Magazine, Volume 4, Issue 4. June/July 2015.

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This article discusses the origins and key characteristics of some important corridor initiatives as well as the main policy issues that emerge around them.


People, places, policies


So-called development corridors are gaining increasing notoriety as a development strategy in developing countries, especially in Sub-Saharan Africa. A form of spatial development approach along key transport routes, these have the potential to coordinate public and private investments within or between countries and regions and strengthen linkages between industries, farmers, people and firms.

But perhaps most importantly, they can help link policies with places, representing a potentially important industrial policy tool. By operating in a relatively well defined space, corridor initiatives offer an opportunity to experiment with targeted policy reforms with short feedback loops and regular, iterative policy reform – a key component of New Industrial Policy – and one which helps link ‘top-down’ policy frameworks with ‘bottom-up’ functional initiatives, leading to employment-creating investment and improved livelihoods.


Corridors in policy


A key driver of the original interest in corridors is the high transactions costs of trade and exchange in developing countries, particularly in Africa. Transport costs in Africa are among the highest in the world, putting an enormous brake on investment, productivity growth and market integration. While corridor approaches may help reduce transport costs and overcome other non-tariff barriers, they can also be used to create clusters or investment poles, helping link industries with local businesses. In this way corridor initiatives help link policy concerns around regional integration and cross-border infrastructures with private sector development, including initiatives to further engage the international private sector for development, and to leverage extractive industries for development.

Corridors are cited as a key development tool at the continental, regional and national levels. This includes the New Partnership for Africa’s Development (NEPAD), Grow Africa and the G8 promoted New Alliance for Food Security and Nutrition. Corridors also feature in the regional strategies of the Southern African Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Tripartite Free Trade Agreement (TFTA), among others. National strategies of numerous countries also point to corridors as an approach, for example Kenya’s Vision 2030 highlights the Lamu Port South Sudan Ethiopia Transport (LAPSSET) Corridor and Indonesia’s national Master Plan for Acceleration and Expansion on Indonesia’s Economic Development. Growth Poles are also increasingly promoted as development strategies, often linked to corridors, for example in Central Mozambique and linked to the Beira Corridor.


Economic transformation corridors?


Corridors by definition link different territories or areas together. At their simplest level, this relates to connecting ports and thus international trade flows to surrounding hinterlands, sometimes across borders, thus taking on a regional dimension. Many trace the origins of the corridors concept back to South Africa’s post-apartheid focus on Spatial Development Initiatives (SDIs) and the Maputo Development Corridor (MDC) in particular. The MDC was one of six initial SDIs, connecting South Africa’s Gauteng industrial heartland to Maputo, Mozambique, its nearest port, tracing a historical transport connection and with relatively limited objectives. Fraser and Notteboom (2014) classify corridors according to trade type: domestic, transit (transporting the cargo of other countries), foreign (transporting primarily imports and exports of a country), and hybrids, depending on its service catchment area.

But the corridors approach is an evolving concept. Other corridor initiatives are now emerging across Africa, ranging in objectives from transport and logistics corridors linking landlocked countries or regions and ports, for example the Trans-Kalahari Corridor, the Northern Corridor in Kenya, or the Abidjan Ouagadougou Corridor; to so-called development corridors, embodying a wider range of additional development objectives and accompanying investments around the central infrastructure (e.g. the Maputo Development Corridor).

Increasingly, corridor approaches are also being linked to other strategic interests, such as promoting agriculture. The associated reforms and support programmes around a corridor can help improve agricultural input and output markets, transport and logistics, energy access and national and cross-border marketing. Prominent examples are the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) and the Beira Agricultural Growth Corridor (BAGC). Corridors thereby offer a means to link different sectoral strategies to promote structural change towards higher productivity sectors and activities, and more and better employment and market opportunities across low-income countries, with agriculture a key sector in this regard.

Finally, there is increasing discussion about how to use a corridors approach to build on infrastructure investments around the extractive sector to promote greater linkages to the wider economy and regional initiatives. This is not always easy. While some suggest, for example, that “The rail to port logistics chain is of such strategic importance to the viability of a mining operation that governments need to balance requests for shared or multi-use access with its impact on the mining company’s operations and its related tax revenues” (Vale Columbia Centre, 2013), there is nonetheless growing recognition of the potential such an approach might have.

Corridors may therefore play a pivotal role in three important transformations for development: increasing urbanisation, rising productivity within sectors by lowering their input and transport costs, while raising productivity growth by movements between sectors as new investments and higher productivity opportunities arise around a corridor.

Corridors traverse rural-urban, as well as ecological boundaries, providing physical links between different countries, types of space, social groups, administrative areas and economic activities. All this raises opportunities and questions for policy-makers and researchers looking for new paths to promoting inclusive, sustainable socio-economic development.

 

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Click on the image to enlarge


Linking spaces…


The geographic scope of a corridor has both economic and regional implications. The nature of trade flows between regions and countries along a given corridor will affect the degree to which different segments of the population can take advantage of the corridor in an inclusive way. This can depend on whether the port country is wealthier, serving its hinterland like, say the Abidjan-Ouagadougou Corridor, or the other way around like the case of the Maputo Corridor. It may also depend how much of the corridor is in one country – the same corridor from Abidjan to Ouagadougou also serves to link the South of Côte d’Ivoire to the North, boosting the importance of the domestic component of the corridor.

The number of countries along or connecting to a corridor may also have implications for corridor processes and the benefits which can be had. While the Maputo Development Corridor is relatively short and includes only two countries, the North-South Corridor from Durban to Dar-es-Salaam includes between five and eight countries, depending on which branches or linkages one includes. While clearly much more of a regional undertaking, and potentially best considered a series of corridors, the difference between the two is important. As Galvez (2014) highlights, “the move from a narrow national corridor to a narrow regional corridor requires facilitating regional cooperation through different coordination mechanisms like regional blocs or dedicated corridor bodies, strengthening border policies, transport facilitation and trade and investment promotion.” There is therefore something of a tradeoff to be made between narrow (or short) corridors covering few countries (or even only one country) and more ambitious corridors with potentially additional regional and cross-border externalities.


…in an institutional context


These points then have implications for organisation and policy design around corridor initiatives. Corridors are generally collaborative initiatives, including public and private interests, a factor that may be important in determining inclusiveness and sustainability. Because of this, it might be argued that spatial approaches actually raise the level of necessary coordination and alignment of interests across actors. By being cross-sectoral, corridors and especially cross-border corridors necessarily involve ministries, donors and others and their departments from both countries, not to mention other public sector agencies, firms, unions, civil society organisations and various key individuals.

By involving international, regional, national and local bodies, as well as public and private actors, these necessarily multi-stakeholder initiatives are therefore driven by specific interests, underlining the need for a good understanding among policy-makers of the formal and informal institutions that underpin these, and the lessons that can be learnt to maximise the inclusiveness of corridor initiatives.

The champion of the SAGCOT and BAGC is the private sector, specifically the Yara fertiliser company, legitimised to some extent through the World Economic Forum (WEF). This is not to say that these do not link to national policy, but as Byiers and Rampa (2013) point out for SAGCOT, this does affect the way in which the corridor project is put together and implemented. On the positive side, the commercial interest of Yara serves as an important incentive for maintaining momentum and building coalitions of donors, state actors and businesses around the initiative that may not have happened without this private sector drive. On the other, SAGCOT has been criticised for its lack of local involvement, dreamt up at the WEF between an international company and the president, with little buy-in at the local or even ministerial level, although the initiative is still at an early stage. This is particularly important given the finding that agricultural value chain approaches such as those used in the SAGCOT may only work for 2-10% of the smallholder population.


Corridors, industrial policy, politics


In industrial policy, distinctions are often made between more neutral ‘horizontal’ policies, such as those to promote a better business environment, and ‘vertical’ approaches that take a more sectoral approach. As the above examples illustrate, in some ways corridor initiatives can do both within their delimited area, and by doing so on a relatively more limited scale, may offer opportunities for greater policy experimentation that can later be scaled-up, also part of the logic behind special economic zones.

But as with all policies, whatever way you cut the cake necessarily implies trade-offs. By definition, spatial or territorial approaches are limited geographically, therefore also excluding parts of the population. While this might be partly addressed by complementary approaches, for example linking policies to promote commercial farming or industry with support or cash transfers to small-scale farmers or firms, it nonetheless involves policy tradeoffs at some level. While a corridors approach may allow more holistic approaches to investing in energy that allows greater coordinated policies to link people and industries, there are nonetheless questions around focusing on one corridor over another.

So while there are many, numerous potential opportunities in using corridors as an industrial policy tool, and we can learn from existing initiatives, a key component is that spatial approaches are nonetheless political thereby requiring policymakers and those working along a corridor to both think and work politically. That is inevitable in linking people, policy and places.

This paper draws and builds on previous ECDPM work on corridors as well as a background paper written with Paulina Bizzotto Molina, commissioned to ECDPM by CGIAR Independent Science & Partnership Council, in preparation for their own work on linking agricultural research with corridor initiatives.

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About the author

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Dr Bruce Byiers is Senior Policy Officer for the Economic Transformation and Food Security Programmes at ECDPM.


Photo: afdb.org

This article was published in GREAT Insights Volume 4, Issue  4 (June/July 2015).

Economic Transformation and TradeTerritorial developmentAfrica