Journal of Finance and Investment Analysis

Regional Economic Integration and Transportation Network Improvement: A Case of Great Mekong Subregion

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  • Abstract

    The paper introduces a multi-regional computable general equilibrium (CGE) for GMS economies. It deals with the effects of infrastructure transportation investment in commodities transportation cost of interregional trade and output production among countries in the GMS. Prior to develop the multi-regional CGE model, the paper summarized the effectiveness from transport investment projects over the GMS countries in recent years. A deep review describes the current status of GMSís transport policies implementation as well as methodologies for measuring the effects of the transportation infrastructure investments on the countriesí economy. The simulation results of the research show the changes in real GDP, international trade and output production among countries in the GMS. The conditions applied to the transportation in the three scenarios are assumed as the transportation technology coefficient in the GMS is uniformly increased. Reductions in transportation cost are reflected by changing a technology-related coefficient in the multi-regional CGE model. The results show that they will surely accelerate the development of Vietnam and the other GMS members by enhancing economic integration among them. The results indicate that the economic growth in Vietnam is particularly significant. More imports become available in Vietnam because the market price of imports decreases, both from other GMS members and from the rest of the world. This enhances production and consumption in the country.