Improving Transnational Transport Corridors
In the OIC Member Countries: Concepts and Cases
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2.5. Economic Factors
2.5.1. Corridors, trade and economics
Between transport corridors and trade there is a mutual relation, fostering each other. They
are connected in the same way as the connection between economics and infrastructure.
According to (Rietveld and Bruinsma, 1998) in the introduction of their book, economic
development is the result of transport infrastructure. It leads to increased productivity, lower
transport costs, affects trade relationships and the location of production factors. According to
Banister and Berechman (2001) if investment political and institutional conditions are met,
beneficial economic development will take place. (COMCEC, 2016) equally points at the
interaction between economics and transportation. “As most of the transportation textbooks
underline, transportation is a derived demand. People use transportation services to go work,
to visit their relatives and friends, to go shopping, etc. That is why, the change in the
transportation activities can be used as a proxy for changes in overall economic activities. The
rise in the container traffic, for example, is a perfect indicator of the growth in the trade and
manufacturing industry. On the other hand, the change in the air passenger traffic can reveal
how some high-tech and service based industries, which rely more on air travel, are
performing.”
Economic theory of international trade started with David Ricardo's theory of comparative
advantage. It says that trade between two entities is based on comparative advantages. About
one century later Eli Heckscher and Bertil Ohlin (Gandolfo, 2014) analyzed that trade between
two entities is based on comparative advantages and factor endowments of the production
factors, being labor, land and capital. A country will export products that use its abundant and
cheap factor of production. This country will equally tend to import products that use the
countries' scarce and dear factor(s).
Illustrative is the so-called flying geese effect (Carruthers, 2003), that occurred between 1960
and 1990 in East Asia. This is the effect of a rapid expansion of the industrial complex
combined with a strong focus on international trade (Akamatsu, 1962), leading to a steep
increase in economic growth, slowing down at a very high (>10% p.a.) economic growth rate .
In East Asia, the first wave of growth was in Japan, followed by a second wave of the "Four
Tigers" - Hong Kong, the Republic of Korea, Singapore, and Taiwan. The third wave occurred in
Indonesia, Malaysia, and Thailand. Followed by the transition economies of China and Vietnam.
The first wave triggered the next one because Japan needed additional production capacity to
meet the high demand for its products, leading to outsourcing. This led to economic growth in
the economies around Japan, and the effect repeated and spread further on. Trade and
economic development went hand in hand (Mascelluti, 2015), and were followed by
institutional, political and technological changes. (Joshua, 2017) highlights the importance of
international trade to the Chinese economy. Carruthers (2003) distinguishes:
 Outward oriented highly accessible countries, having higher incomes, high technology
and services based economies, high transport volumes and competitive logistics costs;