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The IMEC as a catalyst for global prosperity

Bibek Debroy and Aditya Sinha | banglanews24.com
Update: 2024-01-26 11:59:53
The IMEC as a catalyst for global prosperity The proposed route of IMEC. Photo: Collected

Economic corridors have the potential to bring about various benefits, including increased trade, foreign investment, and improved living conditions for citizens in the participating countries.

Additionally, they can contribute to the development of rural areas, address regional imbalances, and enhance the overall socio-economic progress of the regions they traverse. The establishment of such corridors can also lead to the creation of new routes for the flow of goods, thereby increasing economic and geopolitical interdependence between regions.

The India-Middle East-Europe Economic Corridor (IMEC) is poised to revolutionize economic interactions among India, the Middle East, and Europe. Primarily, it aims to establish a multi-modal  transport network integrating sea and rail routes, along with innovative infrastructural elements like hydrogen pipelines and high-tech IT connections. A significant aspect of IMEC is its potential to dramatically enhance trade opportunities. By offering a more efficient transit route compared to the Suez Canal, IMEC is projected to reduce transit times for goods by about 40%.

This would not only expedite trade between India, the Middle East, and Europe but also render it more cost-effective, fostering an environment conducive to economic growth and trade expansion.

The IMEC initiative elevates the existing partnership to a new echelon, firmly establishing economic connections that promise to redefine the landscape of global commerce. U.S. President Joe Biden's characterization of the IMEC as a “game-changing investment” and a “real big deal” highlights its potential to significantly influence not just the regions it directly touches, but also the international community at large.

The Memorandum of Understanding (MoU) delineates that the railroad and transportation networks envisioned under the IMEC aim to establish a “reliable and cost-effective cross-border ship-to-rail transit network.” This development is anticipated to have far-reaching implications on global supply chains and the dynamics of international trade. The European Union President Ursula von der Leyen has underscored the corridor's ability to decrease travel time by 40%, branding it the “quickest link between India, the Middle East, and Europe,” and consequently, a major catalyst in reducing logistical costs.

The corridor's influence extends beyond mere trade facilitation. It is expected to be a catalyst for industrial growth and employment in the participating regions. By providing a more efficient mechanism for transporting raw materials and finished goods, IMEC stands to boost industrial activity. This increased industrial productivity is anticipated to generate a plethora of job opportunities, addressing the employment challenges prevalent in these regions. The correlation between enhanced transportation infrastructure and economic growth is well-established in empirical literature, suggesting that IMEC's impact on job creation and industrial development could be substantial.

IMEC also holds strategic importance in terms of energy security and environmental sustainability. The Middle East's rich energy resources will be more accessible, thereby enhancing the energy security of the involved nations. Concurrently, the focus on clean energy transportation, like hydrogen pipelines, aligns with global efforts to reduce greenhouse gas emissions.

The strategic development of ports and other infrastructures under IMEC is expected to attract foreign investment and strengthen political and diplomatic relations among the participating countries. Additionally, by offering an alternative to China's Belt and Road Initiative (BRI), IMEC holds potential to reshape global trade dynamics and reduce dependency on traditional maritime routes. Moreover, the cultural integration aspect of IMEC, fostering connections among diverse cultures and civilisations, coupled with its potential to enhance regional connectivity and peace, positions it as a transformative initiative with far-reaching implications. 

IMEC is also an evidence of India's strategic realignment towards the Middle East, particularly the Gulf Cooperation Council Countries (GCCs), which has gained momentum under Prime Minister Narendra Modi's leadership. This relationship transcends a simplistic framework of oil trade and market access, encompassing a complex tapestry of security cooperation, cultural ties, and technological exchanges.

IMEC illustrates the transition from a unipolar or bipolar world to a more multipolar global landscape, where multiple centers of power coexist and cooperate. In this context, IMEC acts as a vital link in knitting together these poles, each representing diverse economic, cultural, and political strengths. By facilitating deeper economic ties and fostering mutual reliance among India, the Middle East, and Europe, the corridor is contributing to a more balanced and resilient global system.

However, the success of IMEC is closely tied to the geopolitical stability of the Middle East. This region, despite its rich cultural heritage and strategic importance, has long been afflicted by political unrest and conflict. Establishing peace in the Middle East is not merely a regional concern but a global necessity. A stable Middle East is crucial for ensuring secure trade routes, reliable energy resources, and the unhindered exchange of knowledge and people. It would create an environment conducive to the economic and technological collaborations envisioned by IMEC.

Furthermore, peace in this region would have far-reaching effects, contributing to global economic stability and opening avenues for collaborative solutions to global issues like climate change, poverty, and health crises.

Bibek Debroy is Chairman and Aditya Sinha is Officer on Special Duty, Research, Economic Advisory Council to the Prime Minister of India.

BDST: 1159 HRS, JAN 26, 2024
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