The Effect of Road Upgrading to Overland Trade in Asian Highway Network

Abstract

This paper investigates an impact of road upgrading and improvement on overland trade in 18 out of 32 Asian Highway Network member countries. A regression based cost model was developed. The results indicate that approximately 6.5 billion US dollars is required to upgrade and improve surface condition of the selected roads with total length of 15,842 km. The gravity model approach was adopted to quantitatively evaluate overland trade expansion assuming pessimistic and optimistic scenarios: improvements in road quality indices up to 50 and up to 75, respectively. The results suggests that in the first scenario total intra-regional trade will increase by about 20 percent or 48.7 billion US dollars annually, while second scenario predicts that trade will increase by about 35 percent or 89.5 billion US dollars annually.