Introduction In the Central Asia Regional Economic Cooperation (CAREC)[1] region, several landlocked countries face geographical challenges that impact regional integration and increase the costs of bilateral trade. The Corridor Performance Measurement and Monitoring (CPMM)[2] data reveals significant disparities in both outbound and inbound border clearance costs and times at various border crossing points (BCPs). Additionally, cargo movement speed fluctuates across the corridor network due to differences in infrastructure quality and traffic conditions. These variations result in diverse transportation costs that impact on bilateral trade flows among different country pairs within the region. Furthermore, there is substantial heterogeneity in export compositions across these countries. How do these disparities in terms of border clearance time and travel speed collectively influence transport connectivity between regional countries? Subsequently, how does the varying transport connectivity affect the trade within the region? A study published by the CAREC Institute analyzes transport connectivity and sets forth recommendations to enhance regional trade. Context In the year 2022, CAREC countries collectively recorded exports totaling $3.52 trillion, of which $103.60 billion are from regional exports, constituting 2.94% of the total. Within these numbers, the People’s Republic of China (PRC) plays a dominant role, contributing significantly to both regional and intra-regional shares. PRC’s regional exports amount to $58.5 billion, which makes up over 56% of the entire CAREC region's total exports. In contrast, Afghanistan[3] has lowest total exports and a minimal regional share. Meanwhile, Mongolia and Turkmenistan are heavily reliant on regional trade, with over 80% of their exports remaining within CAREC. In terms of regional connectivity, the CAREC member countries vary across different indicators of trade facilitation. From 2010 to 2022, the average border clearance time was notably high for Pakistan and Afghanistan. Conversely, PRC, Georgia, and Kazakhstan required relatively less time for outbound and inbound border clearance. PRC and Pakistan reported relatively higher outbound costs, while Turkmenistan and Mongolia exhibited substantially higher inbound costs. Similarly, in terms of average travel speed along the corridor, PRC had the highest speed among the regional countries, followed by Uzbekistan and Kazakhstan. Methodology Bilateral transportation time and cost depends on three major factors: (a) geographic distance between two countries; (b) quality of transport infrastructure and traffic intensity conditions which determine speed of traveling; and (c) time and cost required for border clearance procedures at the country of origin, destination, and any transit country involved. The study formulated the segmental transport comparative efficiency (STCE) framework, which stems from the time–cost–distance (TCD) method of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP).[4] A recent publication by the CAREC Institute (Masood, 2024) formulated the STCE framework to look into the connectivity among the CAREC countries in terms of relative efficiency. Specifically, this involves comparing border-crossing times and travel speeds in various regional countries, taking into account the existing minimum border clearance times and the existing maximum travel speeds as benchmark values. Thus, the method provides a standardized way to measure transport connectivity comparatively among regional countries. Findings Some country pairs exhibit notably high efficiency, with minimal delays, efficient border clearance, and robust infrastructure, promoting favorable conditions for trade and transportation. In contrast, certain country-pairs encounter challenges that impede cargo movement, possibly due to lengthy border clearance or insufficient infrastructure. Specifically, the trade route from Kazakhstan to Turkmenistan demonstrates high comparative efficiency in transport connectivity, whereas the route from Pakistan to Tajikistan represents a poorly connected scenario. Meanwhile, the trade routes from Uzbekistan to Georgia and the Kyrgyz Republic to Mongolia are moderately connected country-pairs. Pakistan and Afghanistan, in general, have relatively poor connectivity with other regional countries, primarily due to extended border clearance procedures. In contrast, PRC stands out for its efficient connectivity, based on its infrastructure that enables higher travel speeds. Another facet of regional trade lies in the realm of raw materials, which constitute 12% of the exports in the entire CAREC region. However, excluding PRC, raw materials account for over 40% of the region's exports. Notably, Mongolia, Afghanistan, and Azerbaijan heavily rely on raw material exports. To illuminate the connection between trade costs and the commercial value of trade goods, a deep dive into the value chain is required. The textile sector serves as a pertinent example as it involves an extensive value-added chain that encompasses various steps—starting from the ginning of raw cotton and the production of yarn and fabrics to the creation of finished apparel. According to regional trade data from the 2022 Comtrade database, raw cotton and its fibers amounted to $157 million, yarn to $459 million, and finished textile products including fabrics to $269 million. Transport costs accounted for an average of 2.57% of the commercial value of raw cotton and 1.42% for the trade of yarn. Transport costs on fabrics are only about one-fifth compared to that of raw cotton. The processing of raw materials elevates their commercial value, resulting in reduced transportation costs in proportion to the traded commodity's unit value. This underscores the potential benefits of prioritizing the value-added processing of raw materials within the region before exportation. Recommendations To improve trade and transport connectivity in the CAREC region, the following are recommended: Improve transport infrastructure. Widen road corridors to reduce congestion and increase travel speed within the CAREC region's corridor network. Enhancing transportation infrastructure not only streamlines border clearance procedures but also strengthens regional trade, connecting CAREC with neighboring regions such as South Asia, the Middle East, the Mediterranean, and Europe. Streamline border clearance procedures. Some border crossing points (BCPs) suffer from significant inefficiencies, both in terms of time and cost for border clearance. BCPs with an average border clearance time exceeding 10 hours include Alashankou, Chaman, Dostyk, Gisht Kuprik, Horgos, Karasu (PRC), Kuryk, Peshawar, Shirkhan Bandar, Spin Buldak, Termez, Torghondi, Torkham, and Turkmenbashi. Others, such as Istaravshan, Khorgos, Nau, Takeshikent, Zamiin-Uud, and Zhibek Zholy, while having an average border clearance time of less than 10 hours, bear a cost of border clearance exceeding $200. Implement a trade facilitation measure specific to agricultural products. It can include the electronic issuance and online exchange of sanitary and phytosanitary (SPS) certificates among trading partners. Also, given the perishable nature of the agricultural products, improving logistical infrastructure (such as the establishment of cold chains) is essential. Prioritize the value-added processing of raw materials within the region before export. Transport costs as a percentage of the commercial value are particularly high in the case of raw materials. In particular, exports of Mongolia, Afghanistan, and Azerbaijan have mostly comprised raw materials. Therefore, prioritizing value addition should constitute a central pillar of the trade policy for these economies. The successful execution of these policies requires collaboration among multiple institutions and agencies, particularly those dedicated to regional development, such as the Asian Development Bank and the CAREC Institute. The dedication of governments in the CAREC region is also vital for achieving a consensus on advancing regional connectivity and trade. This commitment may involve standard harmonization, the implementation of cross-border trade facilitation measures, and the promotion of regional cooperation, particularly concerning cabotage rules. Numerous agencies involved in border clearance procedures can further contribute to the smooth implementation of these policies. Moreover, to conduct a thorough cost-benefit analysis, transportation experts can meticulously examine and identify priority areas for improving transportation connectivity, ensuring the optimal allocation of resources. [1] CAREC is composed of Afghanistan, Azerbaijan, People’s Republic of China, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. [2] The CPMM mechanism is an empirical tool designed by the CAREC Program to assess and track the time and cost of moving goods across borders and along the transport corridors, spanning the 11 participating countries—Afghanistan, Azerbaijan, the People’s Republic of China (PRC), Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. [3] ADB placed on hold its assistance in Afghanistan effective 15 August 2021. [4] The cost/time methodology has been elaborated in Beresford and Dubey (1990), further refined by Banomyong (2000), and later disseminated by UNESCAP. Resources A. K. Beresford and R.C. Dubey. 1990. Handbook on the Management and Operation of Dry Ports. United Nations Conference on Trade and Development. A. Masood. 2024. Trade and Transport Connectivity in the Central Asia Regional Economic Cooperation Region. Visiting Fellow Program. CAREC Institute. Asian Development Bank. 2021. CAREC Corridor Performance Measurement and Monitoring Annual Report 2020. G. Samad, A. Masood, and J. Ahmed. 2023. Geographical Proximity and Trade Impacts in the Central Asia Regional Economic Cooperation Program Region. ADB East Asia Working Paper No. 60. K. Kim, P. Mariano, and J. Abesamis. 2022. Trade Impact of Reducing Time and Costs at Borders in the Central Asia Regional Economic Cooperation Region. Emerging Markets Finance and Trade. 58 (9). 2602–2619. R. Banomyong. 2000. Multimodal Transport Corridors in South East Asia: A Case Study Approach. Doctoral dissertation, University of Wales. United Nations Economic and Social Commission for Asia and the Pacific. 2017. Performance Measurement and Monitoring of the Selected Bangladesh’s Trade Corridors. Trade and Transport Facilitation Monitoring Mechanism in Bangladesh: Baseline Study Series No. 5. UNESCAP. Ask the Experts Amjad Masood Senior Assistant Professor, Bahria University, Islamabad Amjad Masood holds an MSc from Humboldt University of Berlin and a PhD from Georg-August-University, Göttingen, Germany. His primary interest lies in the field of international trade policy. His notable research achievements include projects funded by the Asian Development Bank, CAREC Institute, and the Higher Education Commission of Pakistan. Recently, he served as a CAREC Institute Visiting Fellow, focusing on the trade and transport efficiency of Central Asian economic corridors. Central Asia Regional Economic Cooperation Institute (CAREC) The Central Asia Regional Economic Cooperation Institute (CAREC) is an intergovernmental organization promoting economic cooperation in Central Asia and along the ancient Silk Road through knowledge generation and sharing. CAREC is jointly shared, owned, and governed by 11 member countries: Afghanistan, Azerbaijan, People’s Republic of China, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. Leave your question or comment in the section below: View the discussion thread.