Sometimes Way Myanmar

ISSN 2304-5191
Agribusiness
and Food
Industries
Series
Making economic corridors work

for the agricultural sector
Agribusiness and Food Industries Series
4

by
Eva Gálvez Nogales
FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

Rome, 2014
Recommended citation
Gálvez Nogales, E. 2014. Making economic corridors work for the agricultural sector.
Agribusiness and Food Industries Series No. 4. FAO, Rome.
Cover photograph
©FAO/Vasily Maksimov
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iii
Contents
Preface viii
Acknowledgements x
Executive summary xi
Abstract xiii
About the author xiv
Acronyms xv
Chapter 1
Introduction 1
1.1 Background and scope 1
1.2 Objective of the study 2
1.3 Methodology 2
1.4 Structure of the study 3
Chapter 2
Framing the discussion: concepts, theoretical foundations
and application to agriculture 5
2.1 Spatial development initiatives 5
2.2 Definition of economic corridors and related concepts 8
2.3 Types of economic corridors 11
2.4 Theoretical foundations of economic corridors 13
2.5 Corridors and other territorial-based approaches for accelerating
agribusiness growth and attracting investment in developing
country agriculture 18
Chapter 3
Overview of the corridor profiles 25
3.1 Introduction to the mapping and selection exercise
of economic corridor initiatives in developing countries 25
3.2 African corridors and their policy background 26
3.3 Latin american corridors and their policy background 29
3.4 Asian corridors and their policy background 33
3.5 Summary of economic corridors selected 35
3.6 Framework proposed for the analysis of economic corridors 37
iv
Chapter 4
Introduction to the corridor cases 39
4.1 Corridor cases at a glance 39
4.2 Timeline of the corridors studied 48
Chapter 5
Effective direction 55
5.1 Corridor leadership and alignment of stakeholders’ visions
and goals 55
5.2 Corridor strategy and targeting modalities 56
5.3 Processes and tools for planning and launching
corridor programmes 68
Chapter 6
Delivery at scale: budget and modalities of interventions 75
6.1 Budget and sources of funding 75
6.2 Modalities of interventions 80
6.3 Laying the corridor basis: infrastructure development 83
6.4 Components geared towards widening national corridors 95
6.5 Corridor components dealing with regional integration:
from national to regional corridors 110
6.6 Specialization in value chains and market orientation 116
Chapter 7
Delivery at scale: corridor governance 125
7.1 Corridor leadership and alignment of stakeholders’ visions
and goals 125
7.2 Engagement models 131
7.3 Institutional arrangements and delivery mechanisms 134
Chapter 8
Gains and pitfalls of agrocorridor initiatives 145
8.1 Potential gains of agrocorridors for economic growth,
trade and connectivity 145
8.2 Pitfalls to avoid 153
Chapter 9
Guidance for making economic corridors work
for the agricultural sector 161
9.1 Best practices in economic corridor design and implementation 161
9.2 Checklist to guide the design and implementation
of an (agro-)economic corridor 167
Chapter 10
Conclusions 177
10.1 General conclusions 177
10.2 Looking forward: implications and suggestions for future studies 180
v
Annex 1
Glossary 181
Annex 2
Economic corridors identified 187
Bibliography 191
BOXES
1. Spatial planning and spatial development initiatives 6
2. Definition of corridors 8
3. Attributes of spatial development 14
4. Definition of economies of scale and scope, and agglomeration forces 16
5. Metatrends shaping the agricultural sector 20
6. Evolution of the PRA corridors: a moving target 50
7. Vision alignment among corridor stakeholders in the BAGC
and SAGCOT 57
8. The development of a corridor strategy: the case of the PRA Project 61
9. Rationale behind the design of the corridor programme pillars 66
10. The GMS Strategic Framework 2012–2022 69
11. How BAGCI and SAGCOT approach infrastructure development 85
12. The infrastructure component of the PRA Project 91
13. Examples of last-mile infrastructure development
in economic corridors 96
14. Corridor centres 99
15. Corridor financial facilities 100
16. Clustering in SAGCOT 104
17. Engaging the private sector in regional corridor programmes:
the case of GMS 112
18. Corridor specialization in agricultural value chains 117
19. Coordination problems between central and decentralized
public authorities 129
20. Institutional arrangements and delivery mechanisms
of the GMS corridor programme 135
of the PRA Project 139
22. BAGCI’s institutional arrangements and delivery mechanisms 141
FIGURES
1. Potential development path for corridors 9
2. IIRSA integration corridors or hubs 32
3. A framework for economic corridors 37
4. The three GMS corridors 42
5. Corridors of the CAREC programme 43
vi
6. Economic corridors currently supported by the PRA Project 45

7. The Beira Agricultural Growth Corridor 46
8. SAGCOT map 47
9. Indonesia economic corridors 48
10. Timeline of the selected corridor programmes 49
11. Phases of the CAREC programme 49
12. PRA project timeline 52
13. Timelines of BAGCI and SAGCOT 53
14. Timeline of the Greater Mekong Subregion programme 54
15. First- and second-tier system of the CAREC programme 64
16. Pillars of the CAREC programme 66
17. Components of the Beira Corridor programme 67
18. Making economic corridors broader and regionally integrated 82
19. Example of a narrow, regional corridor (Zone III) 83
20. Insertion of SEZs in Indonesian corridors 89
21. Degrees of IFI/donor support for developing corridor infrastructure 90
22. Soft interventions to promote agricultural growth along
an economic corridor 98
23. Tools to support brown and greenfield agribusiness
developments in BAGC 99
24. Support to entrepreneurs provided by the Beira Catalytic Fund 100
25. Ihemi: example of an agricultural cluster in the SAGCOT corridor 105
26. Examples of corridor soft-side interventions aiming
to promote regional integration 116
27. Nucleus farm hub, outgrower model and smallholder block farming 133
28. GMS programme institutional structure 135
29. BAGCI institutional framework 141
30. Employment opportunities generated by SAGCOT 148
Tables
1. Main features of the most prominent types of SDI 7
2. Types of economic corridors 11
3. Estimated world inward FDI stock by sector and region
in million US$, annual 21
4. Corridors identified in Africa 26
5. Policy and institutional framework informing the development
of African corridors 27
6. Corridors identified in Latin America and the Caribbean 30
7. Policy and institutional framework informing the development
of LAC corridors 31
8. Economic corridors identified in Asia 33
9. Policy and institutional framework informing
the development of Asian corridors 34
10. Summary of corridor profiles 36
vii
11. Summary of corridors analysed 39

12. Types of corridors analysed 40
13. Countries involved in each initiative 40
14. Number of corridors in each initiative 41
15. Visions and goals of the corridor programmes 55
16. Sectors prioritized by the corridor programmes 60
17. Sectors prioritized by the corridor programmes 65
18. Sectors targeted by the GMS cooperation programme
and their corresponding plans 70
19. Various types of plans for economic corridor development 71
20. Budget and sources of funding of the corridor experiences studied 75
21. Estimated accumulated investments per corridor and per country 76
22. Percentage of corridor budget dedicated to agriculture 76
23. Contribution of corridor investments to the corridor GDP 77
24. Estimated investments in GMS corridors 77
25. Regional technical assistance projects financed by ADB
under GMS CASP I and II and related fields 78
26. Investments in agricultural value chains in the Indonesian
economic corridors 79
27. Investments in backbone infrastructure along SAGCOT 86
28. Major river and sea ports along the GMS corridors 88
29. PRA-facilitated infrastructure developments 92
30. Estimated investment costs in the Beira Agricultural Growth Corridor 97
31. Estimated contributions to the SAGCOT Catalytic Trust Fund 102
32. Various types of plans for economic corridor development 109
33. SEZs proposed at border areas in the framework
of the GMS corridor programme 113
34. Contract farming experiences in GMS agrifood chains 115
35. Corridor specialization in biofuel crops 118
36. Corridor specialization in grains and other crops key
to ensuring food security 119
37. Corridor specialization in animal and fish protein production 120
38. Corridor specialization in fruit and vegetables 120
39. Corridor specialization in other high-value agricultural products 121
40. Main stakeholders involved in the corridor programmes analysed 126
41. Use of land in BAGC and SAGCOT 132
42. Corridor institutional settings 134
43. Types of public-private collaboration present
in (agro)corridor programmes 143
44. Economic performance indicators 146
45. Estimated benefits of BAGCI 147
46. Estimated new employment generated by BAGCI 148
47. Actual and estimated new investments triggered by the corridors 149
viii
Preface
Several years ago, I had the privilege of working in a groundbreaking economic

corridor project in Peru. The innovativeness and high performance of this initiative
enabled me to discover how spatial planning and agribusiness development policies
and programmes could come together for the benefit of farmers, agribusinesses and
communities.
In recent years, the number of national, regional and international discussions,
events and initiatives exploring this approach has risen notably. In particular, this
concept has gained traction as a tool to promote inclusive agribusiness development
in low- and middle-income countries. However, documented information and reli-
able data on agricultural growth corridors or economic corridors that prioritize
agribusiness development are hard to come by. Even when available, relatively little
analytical effort has been devoted to unpacking the various dimensions of agrocor-
ridor programmes, both the good practices as well as the common mishaps and
mistakes to avoid. I hope that the present report will contribute to addressing this
situation by providing developing country policy-makers and practitioners with a
series of evidence-based, practical tools for the design and successful implementa-
tion of agrocorridors.
The report presents the basic concepts and theoretical foundations behind cor-
ridors. It defines an economic corridor as a conceptual and programmatic model
to structure socio-economic responses to develop a territory, building on a linear
agglomeration of population and economic activities along existing transportation
infrastructure. Precisely, the defining feature of economic corridors is that they
integrate investments in infrastructure, policy and regulatory frameworks, and
institutional strengthening and capacity building. By focusing the provision of pub-
lic goods on high-density economic nodes with a dynamic business environment
(corridors) and on priority sectors (e.g. agribusiness), corridor developers seek to
maximize economic growth.
The study focuses on six cases of economic corridors mapped out in the develop-
ing world, selected according to several criteria, such as the existence of an agricul-
tural component, a minimum budget allocation, and diversity of approaches, lead
conveners and stakeholders. The chosen corridor initiatives take place in Central
Asia, the Greater Mekong subregion, Indonesia, Mozambique, Peru and the United
Republic of Tanzania. These corridor experiences have been benchmarked using
a tailored analytical framework that appraises the comparative advantage of each
corridor, level of connectivity and infrastructure development, characteristics of
agribusiness and farmers involved, as well as policy and institutional development
interventions deployed to develop opportunities for selected agribusiness actors and
agrifood chains. Furthermore, specific processes and tools used for planning and
implementing agrocorridor programmes, governance and sustainability issues, and
impacts on local, national and regional development have been examined.
ix
The report shows how corridors help improve physical connectivity and func-
tioning of markets, while generating economies of scale in agriculture and other
priority sectors. Based on the findings of the study, I have compiled two guidance
tools: the first is a checklist for designing and implementing agrocorridor policies
and programmes, while the second sheds light on good practices and common pit-
falls in agrocorridor development. I sincerely hope that policy-makers, practitioners
and territorial planners will find these tools useful to foster agribusiness competi-
tiveness in their respective localities, countries and regional groups.
Eva Gálvez Nogales

x
Acknowledgements
This book benefited greatly from the contributions of many individuals, and
particularly my former colleagues from the PRA Project in Peru from whom I
learned many valuable lessons on the potential of economic corridors for agri-
business development. I would like to express my deepest gratitude to Dr Javier
García-Verdugo Sales (UNED) for his excellent guidance and practical suggestions.
Thanks are extended to FAO colleagues who reviewed earlier drafts or contributed
insights and definitions. Finally, I wish to thank Larissa D’Aquilio for coordinating
the publication production process, Roberta Mitchell for the copy editing, Monica
Umena for the layout, Simone Morini and Lynette Chalk for quality control and
proof-reading.
xi
Executive summary
In times of economic crisis, development models that help create jobs, generate
wealth, mobilize public and private resources and stimulate key economic sectors
sustainably are more important than ever. While there are no universal solutions, a
development tool that seems to be gaining ground is the so-called “economic cor-
ridor”. This could be defined as a conceptual and programmatic model to structure
socio-economic responses to develop a territory, building on a linear agglomeration
of population and economic activities along existing transportation infrastructure
(adapted from Healey, 2004).
Many high-income countries and regions have placed corridors at the centre of
their economic and territorial development strategies. Similarly, over a decade ago
many of the most dynamic emerging and developing countries started using this
approach. Various international financial institutions are also employing corridors
as the core strategy for supporting regional integration processes in the Southern
Hemisphere. Likewise, private firms (either local or multinational) are increasingly
participating in corridors, together with their public sector counterparts.
Five factors may be behind the expansion of the corridor phenomenon. First, a
corridor is a “smart” tool for integrated territorial planning that combines inter-
ventions in infrastructure (and related services) with specific actions to boost key
sectors. Second, economic corridor programmes encompass a set of coordinated
actions that ensure a critical mass of investments with the ability to transform the
territory. Third, corridors are intrinsically conducive to generating multistakeholder
strategic alliances for development, with the participation of local and central public
authorities, private actors and donors, among others. The fourth factor is the symbi-
otic relationship between corridors and regional trading blocs, which often go hand
in hand. According to Ernst and Young (2011a), combining corridors and regional
trading blocs helps to deepen conventional country-based macro-analysis, in a way
that enriches strategic thinking about how to spur inclusive and sustainable growth
in the developing world. The last factor is that through years of trial and error, best
design and implementation practices have been identified, contributing to improv-
ing the performance of new and ongoing corridor interventions.
This study tries to shed some light on economic corridors in developing and
emerging countries. In their part of the world, the agricultural and agro-industrial
sectors are among the main employment generators and contributors to gross
domestic product (GDP). Naturally, many corridor initiatives in developing coun-
tries target the agricultural sector, which is why the study focuses on the potential
role of economic corridors as an engine of agricultural growth.
The report appraises economic corridor experiences with a strong agricultural
component in Central Asia, the Greater Mekong Subregion, Indonesia, Mozam-
bique, Peru and the United Republic of Tanzania. It also documents the evolution
of corridor interventions from purely transport sector-based initiatives, to logis-
xii
tics and trade corridors, and finally to economic corridors with a multisectoral
approach. It corroborates that agriculture has become a key part of economic cor-
ridor programmes, especially in the Southern Hemisphere.
The comparative analysis undertaken here seeks to establish a corridor typol-
ogy, and to identify the main drivers and components. It also describes corridor
budgets and sources of funding, stakeholders, and management and governance1
mechanisms. A large part of this cross-comparison focuses on the agricultural com-
ponent of corridor interventions, identifying the most recurrent activities under this
component, the financial resources involved, the most often selected subsectors or
value chains2 and target markets (domestic and international), the interface between
infrastructure and agro-industrial development and the positive or negative impacts
of corridor interventions on the agricultural sector.
Finally, the author proposes a checklist of necessary measures or elements that
those interested in developing agrocorridors can use as a reference for deciding what
activities to pursue, what organizational models are most suitable and clarify the
steps that need to be taken.
1
See Glossary.
2
See Glossary.
xiii
Abstract
Developing countries are increasingly using agrocorridors to develop their agricultural

sectors. These corridors promote inclusive agribusiness growth, building on a linear
agglomeration of people and activities along existing transportation infrastructure.
Based on initiatives in Central Asia, the Greater Mekong Subregion, Indonesia,
Mozambique, Peru and the United Republic of Tanzania, this report shows how
agrocorridors help improve physical connectivity and functioning of markets, while
generating economies of scale in agriculture. Agrocorridors do this because they
integrate public and private investments in “hardware” (transport and agribusi-
ness infrastructure), “software” (policy and regulatory framework) and “orgware”
(institutional strengthening and capacity building).
The goal of the book is to provide policy-makers and practitioners with a series
of evidence-based, practical instruments (a checklist and a good practices tool) to
guide the design and implementation of agrocorridors.
xiv
About the author
Ms Gálvez Nogales holds two bachelor degrees in Economics and Business Admin-
istration from the University of Deusto, Bilbao, and a Ph.D. in Applied Economics.
Following several work assignments in Spain and Peru, she joined the Food and
Agriculture Organization of the United Nations (FAO) in 2003, where she serves
as a Marketing and Agribusiness Economist.
xv
Acronyms
ABAD Azerbaijan Business Assistance and Development

ACMECS Ayeyawady-Chao Phraya-Mekong Economic
Cooperation Strategy
ADB Asian Development Bank
AEC ASEAN Economic Community
AfDB African Development Bank
AFTA ASEAN Free Trade Area
AGRA Alliance for a Green Revolution in Africa
AITF Afghanistan Infrastructure Trust Fund
ASEAN Association of Southeast Asian Nations
AU African Union
AUC African Union Commission
BAGC Beira Agricultural Growth Corridor
BAGCI BAGC Initiative
BCF Beira Catalytic Fund
BDS Business development services
CAADP Comprehensive Africa Agriculture Development Programme
CAAP Central American Agricultural Policy
CAC Central American Agricultural Council
CAIS Central American Integration System
CAN Andean Community
CAREC Central Asia Regional Economic Cooperation
CARICOM Caribbean Community and Caribbean Common Market
CASP Core Agriculture Support Programme (GMS)
CBTA Cross-Border Transport Agreement (GMS)
CEPAGRI Centro de Promoção da Agricultura,
Ministry of Agriculture of Mozambique
CEP-BCI Core Environment Programme and Biodiversity
Conservation Corridors Initiative (GMS)
CES COMESA-EAC-SADC Tripartite Agreement
CF Catalytic Fund
xvi
CGIAR Consultative Group on International Agricultural Research

CGSGI Clinton Giustra Sustainable Growth Initiative
CIRAD Centre de Coopération Internationale en Recherche
Agronomique pour le Développement, International
Cooperation of Agricultural Research for Development
CO2 Carbon dioxide
COMESA Common Market for Eastern and Southern Africa
CONFIEP National Confederation of Private Business Institutions, Peru
CSR Corporate social responsibility
CTF Catalytic Trust Fund
DANIDA Danish International Development Agency
DBSA Development Bank of Southern Africa
DFID Department for International Development, United Kingdom
DRC Democratic Republic of the Congo
EAC East African Community
EAIC East Asia Industrial Corridor
EBRD European Bank for Reconstruction and Development
ECF GMS Economic Corridors Forum
EIB European Investment Bank
ESC Economic Service Centre
EU European Union
EurAsEC Eurasian Economic Community
EWEC East-West Economic Corridor
FBT Fernando Belaúnde Terry (highway), Peru
FDI Foreign direct investment
FRETA GMS Freight Transport Association
FSC Forest Stewardship Council
FTA Free Trade Agreement
GDA Global Development Alliance (USAID)
GDP Gross domestic product
GHG Greenhouse gas (emission)
GILA Greater Ibadan Lagos Accra (Corridor)
GMS Greater Mekong Subregion
GoI Government of Indonesia
GoM Government of Mozambique
GoP Government of Peru
xvii
GoT Government of the United Republic of Tanzania

GPS Global positioning system
Ha Hectare
IaDB Inter-American Development Bank
IDB Islamic Development Bank
IFAD International Fund for Agricultural Development
IFC International Finance Corporation
IFI International financial institution
IIRSA Initiative for the Integration of Regional Infrastructure
in South America
IMF International Monetary Fund
IOM International Organization for Migration
IPA Investment promotion agency
ISC Infrastructure service company
ISPM Instituto Superior Politécnico de Manica
JICA Japan International Cooperation Agency
LAC Latin America and the Caribbean
Lao PDR Lao People’s Democratic Republic
LED Local economic development
M&E Monitoring and evaluation (system)
MCC Millennium Challenge Corporation
MEDI Micro Enterprise Development Initiative
MERCOSUR Southern Common Market/Mercado Común del Sur
MOU Memorandum of Understanding
MP3EI Masterplan for Acceleration and Expansion of Indonesia’s
Economic Development
NDF Nordic Development Fund
NEPAD New Partnership for Africa’s Development
(Programme of the AU)
NGO Non-governmental Organization
NSEC North-South Economic Corridor
OECD Organisation for Economic Co-operation and Development
OFID Organization of the Petroleum Exporting Countries (OPEC)
Fund for International Development
PEDSA Plano Estratégico para o Desenvolvimento do Sector Agrário
PERSUAP Pesticide Evaluation Report and Safe Use Action Plan
xviii
PIDA Programme for Infrastructure Development in Africa

PMO Prime Minister’s Office (United Republic of Tanzania)
PPP Public-private partnership
PRA Poverty Reduction and Alleviation (Project), Peru
PRAI Principles for Responsible Agricultural Investment
R&D Research and development
REDD Reducing Emissions from Deforestation
and Forest Degradation (programme)
RETA Regional technical assistance
SAARC South Asian Association for Regional Cooperation
SAC Southern Agricultural Council
SADC Southern African Development Community
SAGCOT Southern Agricultural Growth Corridor
of the United Republic of Tanzania
SDI Spatial Development Initiative
SEARCA Southeast Asian Regional Center for Graduate Study
and Research in Agriculture
SEC Southern Economic Corridor
SEZ Special economic zone
SF Strategic framework
SFA-TFI Strategic Framework for Action on Trade Facilitation
and Investment
SIDA Swedish International Development Agency
SIEX Sierra Exportadora (programme), Peru
SME Small and medium enterprise
SPS Sanitary and phytosanitary standard
TA Technical assistance
TAP Tanzania Agriculture Partnership
TARIPA Tanzania Rice Partnership
TAZARA Tanzania-Zambia Railway Authority
T-FTA Tripartite Free Trade Area
TIC Tanzania Investment Centre
TTFS Transport and Trade Facilitation Strategy (CAREC)
TTF-TAF Trade and Transport Facilitation Task Force (GMS)
UK United Kingdom
UN United Nations
xix
UNASUR Union of South American Nations

UNCTAD United Nations Conference on Trade and Development
UNDP United Nations Development Programme
UNED Universidad Nacional de Educación a Distancia – Spain
UN ESCAP United Nations Economic and Social Commission
for Asia and the Pacific
US$ United States dollar
USAID United States Agency for International Development
WEF World Economic Forum
WGA Working Group on Agriculture (GMS)
1
Chapter 1
Introduction
1.1 BACKGROUND AND SCOPE

Investment strategies for agribusiness and agro-industry3 development imply the
use of a wide array of approaches, partnerships and tools. One such approach is spa-
tial (or territorial) development.4 This concept has gained momentum in developing
and emerging economies, as innovative attempts to apply spatial planning principles
in these countries have begun to yield good results. Several types of spatial develop-
ment initiatives (SDIs) have proliferated including, inter alia, economic corridors,
clusters, industrial parks, special economic zones (SEZs) and technopoles.5
The use of “economic corridors” emerges as increasingly important to boost
agricultural and other economic activities in a specific spatial area. An economic
corridor can be defined as a conceptual and programmatic model for structuring
physical and socio-economic responses to develop an area building upon a linear
agglomeration of economic activities and people along the physical backbone of
transport infrastructure (Healey, 2004). This linear agglomeration serves as the basis
for planning concerted actions seeking to promote specific economic activities, such
as agriculture and agro-industry, in a territory.
High-income countries and regions, such as the European Union (EU), Canada
and the United States of America, have extensive experience in implementing such
initiatives. However, their use is still a recent phenomenon in the Southern Hemi-
sphere and, hence, relatively understudied. The study of economic corridors and
their impact on agro-industrial development in low- and middle-income countries
will be the central subject of this report.
The scope of research is threefold. First, it presents the concept of economic
corridors and summarizes the current thinking on the matter. Second, the study
examines the preconditions, approaches and institutional arrangements needed
to streamline, mobilize and facilitate investments in agribusiness along economic
corridors, looking into the roles and capabilities of the public and private actors
involved. Third, it assesses the potential impacts – both positive and negative – of
agricultural development along economic corridors in terms of growth, social
development and environmental sustainability.
3
See Glossary.
4
Spatial/territorial development/planning are considered synonyms.
5
A definition of these concepts is provided in 2.1.
2 Making economic corridors work for the agricultural sector
1.2 OBJECTIVE OF THE STUDY

The purpose of the report is to determine whether the concept of corridors can be
effectively applied to unlock the unrealized agricultural potential of defined terri-
tories and what the best approaches would be to do so in the context of developing
and emerging economies.
In broader terms, the study seeks to contribute to the body of knowledge on
effective ways to bring transformative investments6 into agricultural and agro-
industrial systems in developing and emerging economies. The distinguishing
feature of the study is that it applies territorial development approaches and, more
specifically, corridors, to the agribusiness and agro-industry sectors. Given that the
related literature has concentrated mostly on transport, energy and industrial manu-
facturing corridors, and that the agribusiness sector has unique and well-recognized
characteristics (partially stemming from the seasonality, variability and perishability
of the raw materials) that make interventions different from those in other areas, the
study aims to fill a gap in the policy literature.
More specifically, the document proceeds to identify the preconditions, good
design and implementation practices to embed agribusiness development success-
fully into economic corridor initiatives and, by extension, in other relevant spatial
planning and economic growth programmes.
1.3 METHODOLOGY
The methodology includes a literature review on the subject of economic cor-
ridors and related concepts, comprising the economic theories underpinning this
approach. The literature review also serves the purpose of mapping out economic
corridor initiatives in low- and middle-income countries. Additionally, key docu-
ments are examined, describing territorial development and regional integration
strategies in which economic corridors are listed as a core approach to agricultural
growth and development.
Upon completion of the mapping exercise of economic corridor programmes, a
number of initiatives have been selected by applying a predetermined set of criteria.
These include the existence of an agricultural component, a minimum budget
allocation, and diversity of approaches, lead conveners and stakeholders. The
selected economic corridor cases include experiences from Central Asia, the Greater
Mekong Subregion (GMS), Indonesia, Mozambique, Peru and the United Republic
of Tanzania. Some of the chosen corridors are at country level while others involve
multiple countries.
The analytical core of the study consists of a comparative analysis of the selected
experiences concerning economic corridors with an agricultural or agribusiness
component in developing and emerging economies. This analysis is performed using
a comprehensive framework for characterizing and appraising the case studies, thus
exposing the main traits of the corridors, their strengths, weaknesses, preconditions
for their effectiveness, as well as performance.
6
See Glossary.
Chapter 1 – Introduction 3
The intended final outcome of the research is to produce a checklist that may
guide analysts and policy-makers in the design and evaluation of effective agricul-
tural components in the framework of an economic corridor programme.
1.4 STRUCTURE OF THE STUDY

The study is structured in seven chapters. The first is this brief introduction that
presents the background, objective and methodology of the report.
The second chapter frames the discussion on the territorial development debate
(including corridor approaches) and then focuses on the notion and types of
economic corridors, starting with the definition and brief description of their key
features. It then summarizes the body of knowledge on the application of this
approach to various economic sectors, primarily transport, energy, manufacturing
and health. The evolution from transport and logistics corridors to economic and
development corridors is closely examined. Subsequently, the conceptual founda-
tions and economic theories behind economic corridors are described, summariz-
ing the current thinking. Some elements for discussion are drawn from economic
geography, industrial localization, trade and management theories, spatial/territorial
development and other disciplines. The elements of convergence among the various
fields explored to do with economic corridors are discussed. The chapter also takes
a glimpse at the promising role that the economic corridor model can play in the
development of the agricultural sector. Furthermore, it delves into the potential of
economic corridors as a tool for mobilizing and facilitating investments into the
agricultural sector of developing countries.
The third chapter presents the results of the mapping exercise carried out to iden-
tify economic corridors with an agricultural component in developing and emerging
economies. A set of eligibility criteria is then applied to select a maximum of three
experiences per region: Africa, Asia and Latin America.
Chapters 4 to 7 are dedicated to describing the selected case studies, elaborating
on the main corridor initiatives identified and describing relevant features of the cor-
ridor models, such as the actors that are driving the corridors and their motivations,
the components of the programmes analysed, with a focus on the initiatives related
to the agricultural sector, the budget and institutional arrangements, as well as moni-
toring parameters and impact evaluation. These chapters undertake a comparative
analysis of the cases, which constitutes the main contribution of the research.
The last chapters present the general findings, highlighting the best practices
identified during the analysis and the potential difficulties that may be encountered
when promoting agricultural corridors. Much attention is devoted to assessing the
gains and pitfalls encountered by the corridor experiences studied. On the basis of
this analysis, a checklist is proposed to guide policy-makers and practitioners in the
design and successful implementation of this type of initiative. The report ends with
a presentation of the conclusions and the underscoring of some areas that would
benefit from further investigation.
A glossary with key concepts used throughout the study is presented at the end
of the document.
5
Chapter 2
Framing the discussion:
concepts, theoretical foundations
and application to agriculture
This chapter delineates the concept of SDI and the different programmatic tools that
are encompassed under this umbrella term: economic corridors, clusters, industrial
parks, SEZs and technopoles. Although these SDIs are applied on the global scale,
in this study the accent is placed on developing and emerging economies. The dis-
cussion then centres on the definition and typology of economic corridor, with its
different nuances in approaches (e.g. economic, development and trade corridors).
The theoretical foundations behind corridors are briefly explained. Finally the dis-
cussion shifts towards the application of corridor schemes to the agricultural sector
as a means to attract investments.
2.1 SPATIAL DEVELOPMENT INITIATIVES

Spatial or territorial development refers to the evolution of territories in their
economic, social, environmental and physical dimensions (CEMAT, 2007). Spatial
planning is concurrently a scientific discipline, an administrative technique and a
policy developed as an interdisciplinary and comprehensive approach to achieve
growth, competitiveness and regional development, as shown in Box 1.
The term SDI encompasses the concepts of economic corridors, clusters,
industrial parks, SEZs and technopoles, among other related initiatives. Table 1
summarizes the main features of each kind of SDI.
What these initiatives have in common is that they all represent an agglomeration
of economic activity in a specific location where businesses gain advantages through
co-location. By supporting SDIs, governments try to reinforce this co-location
process through the provision of infrastructure and facilities, capacity building,
research and innovation and a range of services and incentives.
These initiatives display differences in terms of their territorial and sectoral/
industry scope. With regard to their geographic scope, corridors cover large areas
within a subnational region, a country or neighbouring nations, with some of them
spanning across several thousand km. For example, the Central Asia Regional
Economic Cooperation (CAREC)7 corridors cross ten countries and extend over
4 000 km. Clusters are more geographically concentrated than corridors, as they
are usually circumscribed to provinces, municipalities and smaller administrative
7
Described in Chapters 4 to 7.
BOX 1
Spatial planning and spatial development initiatives
Spatial planning seeks to organize physically a geographic zone according to an overall strat-
egy. In keeping with the proposed strategy, the government seeks to influence the distribu-
tion of people and activities at various scales of space, as well as the location of infrastructure
and residential, business and natural areas. When doing so, it pays particular attention to
ensuring the coherence of sectoral policies that affect the territory.
The underlying objectives of spatial development tend to form a triangle linking three
goals: enhancing competitiveness (by promoting trade and investment, optimizing the use
of infrastructure and encouraging value-addition, among others); ensuring social cohesion;
and promoting the conservation of natural resources and cultural heritage (EC, 1999). This
triple goal of economic development, balance and protection (i.e. avoiding the production of
negative externalities) must be reconciled when planning the desired spatial transformation
of a country or region.
SDIs are the ultimate expression of spatial planning. According to CEMAT (2007), SDIs
are projects generated or driven by the public sector that contribute positively to territorial
development on different scales. SDIs are characterized for:
being designed and implemented based on specific geographic linkages (USAID, 2000);
constituting a cluster of mutually reinforcing development projects established to help a
geographic area thrive, as opposed to stand-alone initiatives (Du Pisanie, 2002);
being embedded in an institutional framework to facilitate their design, implementation
and monitoring (ibid.);
linking infrastructure and large-scale economic sectoral investments in defined geographic
areas (Thomas, 2009).
Governments launch SDIs in an effort to develop dynamic zones of sub/supraregional or

global economic integration throughout defined geographic areas. These zones offer attrac-
tive business and investment environments in specific optimized areas that have a competi-
tive edge. This edge can be gained through, inter alia, good infrastructure connectivity and
access to a wide range of global services8 (Bialasiewicz, 2011). However, this is possible only
if the targeted territory has an untapped potential that can be unlocked by carefully select-
ing investments, leading to employment generation, wealth creation and reduced disparities
between core and periphery. To unlock the potential, Luiz (2003) proposes several interven-
tions, including:
removing bottlenecks to investment, almost always infrastructural in nature;
stimulating strategic investment opportunities across key sectors and their promotion
among domestic and international corporate actors;
harmonizing regulatory and policy frameworks to maximize the spatial implications of
industrial, trade and other sectoral policies that come together to develop the compara-
tive advantage of specific economically viable areas.
Examples of these interventions are highlighted in the analysis of the corridor experiences.
8
See Glossary.
Chapter 2 – Framing the discussion: concepts, theoretical foundations [...] 7
Table 1
Main features of the most prominent types of SDI
Prominent features
Type of SDI
Sectoral/
Overall purpose Geographic scope Emphasized feature
industry scope
Economic Integrated Supranational (might Multi- Coupling infrastructure

corridor planning encompass smaller SDIs); dimensional investments with trade
linear agglomeration and regulatory policy
spanning across hundreds reforms and sectoral
or thousands of km development plans
Agrobased Network Regional or provincial Single sector Benefits

cluster linkages agglomeration (revolving of agglomeration
around production area); economies
from hundreds and promotion
to thousands of ha of collective action
Agro-industrial Value addition Urban (accessible distance Single sector/ Common infrastructure
park by processing from production area); multisectoral and logistics facilities
a few ha
Technopole Innovation Park + academic
and research institutions
Special Export and Urban (possibly near Single sector/ Advantageous economic
economic zone promotion of to port area if it is an multisectoral and regulatory
(SEZ) foreign direct export promotion zone); frameworks
investment (FDI) a few ha
Source: author’s elaboration.
units. For instance, in the Chilean province of Bío Bío there is a blueberry cluster
that covers 3 400 ha (FAO, 2010). Technopoles, industrial parks, SEZs and business
incubators have a more restricted geographic scope, as they generally take up only
a few ha usually located on the outskirts of a city. For example, Moroccan and
Tunisian food technopoles span over 100 ha on average (FAO, 2011).
There is much diversity in terms of sectoral or industry scope: some SDIs attach
themselves to a particular sector, while others are multisectoral. For example, clus-
ters are “geographic concentrations of inter-connected companies and institutions
in a particular field” or industry (Porter, 1998; p. 78). Technopoles and SEZs, on the
other hand, can either target single sector or multisectoral development. Corridors
are among the most complex schemes; not only are they multisectoral, but they
have other interrelated dimensions besides economic sector development, such as
infrastructure, urbanization and environmental sustainability (CEMAT, 2007).
Additionally, each type of SDI places emphasis on different matters. The core
element of technopoles is to bring together in one location (or in multiple nearby
interrelated locations) the necessary elements (shared facilities and services) for
making innovation happen (FAO, 2011). For SEZs, the underscored feature is
the provision of economic and regulatory frameworks (e.g. low tax and incentive
regimes, including exemptions on sales/value added and/or income taxes),9 which
9
For example, the transfer of assets in cases of shifting any industry from an urban area to a SEZ can be
exempted from tax on capital gains or an income tax deduction might be offered for a period of time.
are relatively more liberal than in standard locations. Industrial parks allow the pro-
vision of common infrastructure facilities, while also helping the industries present
there to gain from other benefits of clustering (FAO, 2006). Finally, corridors foster
economic activities along a transport and trade route by adding, to large-scale trans-
port and trade infrastructure development, policy and programmatic interventions,
with a holistic and multisectoral approach, as explained under the next heading.
A trend consistently observed across developing countries is the combination
of several types of initiatives in a geographic area. Particular corridors can contain
several industrial zones, SEZs and other SDIs. For instance, the Delhi-Mumbai
industrial corridor incorporates nine mega industrial zones (FAO, unpublished
research), and the GMS corridors include several cross-border SEZs and industrial
parks, as will be seen in Chapters 4 to 7.
2.2 DEFINITION OF ECONOMIC CORRIDORS AND RELATED CONCEPTS

The classification presented in Figure 1 is helpful to visualize the potential develop-
ment path for corridors, although the differences between the various stages are not
clear-cut and some overlap is common.
Transport corridors can be defined from different perspectives, notably their
physical and functional dimensions. From a physical standpoint, a corridor is
a category of space of linear nature connecting large agglomerations (economic
nodes) across a geographic area through a number of transport routes. Along these
BOX 2
Definition of corridors
The defining feature of corridors is the linear agglomeration of economic activities

and people along the physical backbone of transport infrastructure (Healey, 2004).
Nonetheless, the corridor approach can expand from that linear configuration
“[...] into tree networks, meshes and finally into hub-and-spoke network systems”
(UNESCAP, 2007; p. 37). Physically, corridors encompass both rural and urban areas
that are linked in a contiguous geographic region (USAID, 2000).
From a business management point of view corridors can also be described as
“islands of competence” (areas that stand out on the basis of their sustainable
competitive advantage, grounded in economic performance) linked by connective
infrastructure (roads, railroads and air connections). By improving the connective
infrastructure, it is possible to help realize the full economic potential vested in each
island of competence (Durchslag, Rao and Puri, 1994).
The notion of corridor encompasses different but related conceptual models
for structuring physical and socio-economic responses in order to develop an area.
These interrelated models can be seen as a gradual evolution of corridors through
five stages, from transport corridor (stage 1), to logistics corridor (stage 2), transport
and trade facilitation corridor (stage 3), economic or growth corridor (stage 4), and
development corridor (stage 5) (adapted from ADB, 2011c).
figure 1
Potential development path for corridors
Transport corridor Logistics corridor Trade corridor Economic corridor Growth corridor
 Transport  Transport  Logistics  Trade  Economic
infrastructure corridor corridor corridor corridor
+ + + + +
 Transport services  Logistics  Trade facilitation  Other economic  Coordination of
coordination dimensions non-economic
elements
Stage 1 [...] Stage 5
Source: author’s elaboration based on ADB, 2011c.
routes the corridor links large urban centres (with high economic density) and other
smaller nodes (intermediate cities and towns) that may exist in between the land
surrounding the corridor.
Gateways (e.g. airports and ports) that bond the economic nodes to the hinterland
or to global trade routes are particularly important (IDB, 2011), to the point that
some corridors are defined by their major gateways (e.g. the Maputo Development
Corridor connecting the port of Maputo to the industrial areas around Witbank
in eastern South Africa). Transport corridors may include short and long legs: the
short legs connect local or regional centres (urban and industrial zones), whereas
the long legs may incorporate road, rail, inland waterways and short sea shipping.
Depending on the number of transport modes that are being integrated, corridors
can be unimodal, bimodal or multimodal. Transport corridors can be approached as
individual projects or as part of a transportation network, for example, on a regional
basis. Furthermore, a network of transport corridors can be integrated into broader
infrastructure programmes that encompass for instance power and telecommunica-
tion networks.
The main function of transport corridors is to provide more efficient transport
services in terms of time, and economic and environmental costs (Arnold, Olivier
and Arvis, 2005), by improving both transport infrastructure and services. Con-
sequently, they reduce transport costs, sustain the rapid expansion of trade and
facilitate integration within the country or supranational region and into global
markets. This is particularly true for developing landlocked countries.10
10
According to estimates by the United Nations Conference on Trade and Development (UNCTAD),
landlocked countries spend on average almost twice more of their export earnings for the payment
of transport and insurance services than the average for developing countries, and three times more
than the average of economies belonging to the Organisation for Economic Co-operation and
Development (OECD). According to the United Nations Office of the High Representative for the
Least Developed Countries, Landlocked Developing Countries and Small Island Developing States,
of 48 landlocked countries worldwide, 30 are classified as developing countries, of which 16 are least
developed. Source: http://www.un.org/special-rep/ohrlls/lldc/default.htm [Accessed May 2013].
Logistics corridors are corridors that not only physically link an area or a region
but also harmonize the institutional framework pertaining to logistics and all
technological, organizational and legal conditions for such transportation. Their
objective is to facilitate the efficient movement and storage of freight, people and
related information (Banomyong, 2008).
The concept of trade corridors lacks a precise widely agreed upon definition.
In simple terms it can be understood as a transport (or logistics) corridor where
additional trade facilitation efforts11 are being deployed. In physical terms, trade
corridors seek to improve trade flows (and more generally the movements of goods,
services and people) by connecting one or more adjoining countries, or by provid-
ing access to the sea for landlocked countries. From a functional standpoint, trade
corridors emphasize the need to eliminate barriers hindering the seamless movement
of passengers and goods by streamlining and simplifying trade/customs procedures
and trade policy. Examples of such barriers in transnational corridors are: incompat-
ible customs information technologies; the absence or inadequacy of transnational
legislation; operational obstacles stemming from heterogeneous transport, freight
and custom regulations; and incomplete networks of cross-border links.
Economic corridors encompass analytical and policy dimensions. The analytical
dimension defines the corridor on the basis of spatial-functional forms and patterns
(reinforcing the idea that corridors are linear clusters of land uses that interact with
each other such that the whole is greater than the sum of its parts (Albrechts and
Tasan-Kok, 2009). The policy dimension interprets corridors as policy and spatial
planning instruments (ibid.). One of the key features defining economic corridors
is their ability to attract investment and generate economic activities along an area
or region. Yet to achieve this, physical connectivity and logistics facilitation must be
in place (Banomyong, 2008).
Economic, development and growth corridors are frequently employed in an
interchangeable manner referring to the elevation of an area to a certain level of
development (Campbell, Maritz, and Hauptfleisch, 2009). However, development
or growth corridors could also be interpreted as those where non-economic ele-
ments (e.g. health systems, environment protection [green corridors], and cultural
dimensions) have been added to economic initiatives. For the sake of simplification,
in the present document all these terms are considered synonyms.
While it is important to distinguish between transport, trade and economic
corridors, they are all inherently designed for fostering spatial economic growth,
through the improvement of primarily transport and logistics services available to
cities and countries along the corridor. Moreover, there is a natural, evolutionary
relationship between trade and economic corridors. This relationship pushes cor-
ridor stakeholders increasingly to incorporate new economic promotion elements
in the original strategy of transport (and trade) corridors, as in the cases of the GMS
corridor programme and the East and southern Africa corridors (Arnold, 2006),
analysed in Chapters 3 to 7. Furthermore, whether they are labelled one way or
another, corridors must make economic sense in order to be viable. This implies
11
See Glossary.
the existence of nodes with substantive economic density and additional growth
potential, and the possibility of amplifying the potential for economic growth of
areas in between core economic nodes. As ADB (2011c; p. 3) puts it, a corridor from
“nowhere to nowhere through nowhere” would never be meaningful.
The transition across the various sequenced stages may take place in different
ways and at a different pace. This depends on the stakeholders (whether public or
private investments are leading the way); market orientation (which will largely
depend on the predominance of foreign direct investment (FDI) or more domestic-
bound investors); policy focus (policies friendly to small and medium enterprises
[SMEs] vis-à-vis policies favouring large industrial enterprises and logistics compa-
nies) and sectoral priorities (ADB, 2011c).
2.3 TYPES OF ECONOMIC CORRIDORS

There are several types of economic corridors according to their geographic and
sectoral scopes and key drivers, as summarized in Table 2.
From a geographic standpoint, economic corridors can be undertaken at dif-
ferent administrative or governmental levels within a country (local, subnational
regions and national). Some corridors may extend to cross-border, transnational
and regional contexts,12 as in the case of regional (supranational) corridors in the
Greater Mekong Subregion (see Chapters 3 and ff.). Subnational level corridors
span across a region, state or province within a country. They may also include
cross-border variants, i.e. regions composed of parts of two or more countries. A
transnational corridor spans between two or more adjoining countries; it constitutes
an area characterized by its rapid and large-scale spatial dynamics within a world
Table 2
Types of economic corridors
Geographic scope Urban corridor vs urban-rural corridor

Subnational-level corridor
Transnational or regional (supranational) corridor
Sectoral scope Monosectoral corridor (e.g. agriculture and transport)

Multisectoral corridor
Driver Public-led corridor

Donor- or international financial institution (IFI)-led corridor
Private-led corridor
Multistakeholder partnership corridor or public-private partnership
(PPP) corridor
12
For the purpose of this report, “cross-border” is between two or more countries sharing borders,
“transnational or multinational” refers to several countries (not necessarily neighbour nations), and
“regional” encompasses all the countries in a region.
of thinning national borders. Some corridors are relatively short in length, e.g. the
Maputo Corridor that links Mozambique and South Africa, while others are defined
by the transnational region they serve, such as the GMS corridor (Arnold, 2006).
In supraregional or cross-border regional corridors, the emphasis is on regional
cooperation (e.g. transport and trade facilitation, and policy harmonization) across
the countries involved (ADB, 2011c). This leads to important differences in stake-
holders, policy space and institutional options for coordinating actions compared
with subnational regional planning (Marrian, 2001).
Also regarding their geographic scope, most economic corridors comprise both
urban and rural areas. However, some economic corridors develop predominantly
in an urban context. These are known as urban corridors (UN-HABITAT, 2010a;
2010b; 2012), in which several urban spaces of various sizes, including megaci-
ties, are linearly connected through transport networks that improve connections
between cities and open up the hinterlands (UN-HABITAT, 2010a; 2012). Many
urban corridors are experiencing the fastest growth rates and the most rapid met-
ropolitan transformation. In these corridors, urban planning (metropolitan areas
and major cities and towns) goes hand in hand with the development of strategic
transport infrastructure (and other regional infrastructure networks including, in
particular, the water and sewage infrastructure) required to support urban growth,
and a long-term strategy for the integrated development of agricultural, industrial
and mixed-use areas (Rodrigue, Comtois and Slack, 2009; GAA, 2012).
As regards the sectoral scope, most economic corridors are multisectoral as they
target several industries and sectors simultaneously. However, on some occasions,
corridor initiatives are monosectoral, i.e. they focus on one major sector alongside
transport/infrastructure development. In this case, they are usually labelled upon
the selected sector: energy corridor, health corridor, agricultural corridor, and min-
ing, multimedia hi-tech, industrial manufacturing and tourism corridors, and so on.
Some examples include several energy corridors (oil, gas, electricity and hydrogen
corridors) serving the European Union (EU)13 (Marín-Quemada, García-Verdugo
and Escribano, 2012); the Caspian Region Energy Corridor (Mavrakis, Thomaidis
and Ntroukas, 2006); the Sarawak Corridor of Renewable Energy in Malaysia
(Sovacool and Bulan, 2012); the Multimedia Super Corridor in Malaysia (Bunnell
and Coe, 2005); the Lao Tourism Corridor (Travers, 2008); the Mauritanian Mining
Corridor (World Bank, 2008b); and oil corridors in many African countries.
Agribusiness is one of the most commonly prioritized sectors that are supported
by and expected to act as an engine for growth in developing country corridors. At
times, the whole economic corridor programme revolves around agricultural and
agribusiness development concentrated around a major infrastructure investment or
set of interrelated infrastructure projects. In this case, the corridor can be described
as an agricultural corridor or agrocorridor. In reality, these agricultural corridors
are a bisectoral solution, in the sense that they try to create synergies by simultane-
ously developing both the agricultural and the infrastructure sectors (e.g. transport,
13
Reaccess project (7th Framework Programme of the European Commission), information available
at: http://reaccess.epu.ntua.gr/VirtualLibrary/EnergyCorridors.aspx [last accessed August 2013].
energy, telecommunications and agricultural-supporting infrastructure). Most

frequently, however, agribusiness is just one of several prioritized sectors within the
corridor, together for example with tourism or mining. In the following chapters,
corridor experiences that fall under both categories will be described.
A third typology emerges to highlight who champions the initiative. Most economic
corridors are of a top-down nature and involve mainly public authorities (public-led
corridors). Further corridors are supported by the international community (donors,
IFIs and technical agencies), working closely with national governments. Other cor-
ridors evolve mostly as the result of private interests: these are private-led corridors.
There are a growing number of corridor initiatives largely based on a bottom-up
approach, involving civil society as well as private interests, mostly through PPPs14.
These can be called PPP corridors or multistakeholder partnership corridors.
The rationale for typifying the corridor programmes is primarily that each
category has intrinsic implications in terms of the components proposed and stake-
holders involved and, therefore, the type of organizational structure adopted. For
example, in multisectoral corridors there would probably be specific activities and
institutional mechanisms to ensure coordination and cross-pollinization among the
different sectors. Likewise, regional corridors will include actions to align national
and regional policy frameworks, activities and institutional mechanisms. Finally,
there is an obvious relationship between who leads the corridor and the type of
activities proposed. For instance, a corridor programme primarily supported by an
IFI, such as the regional corridor initiatives in Central Asia and the Mekong led by
the Asian Development Bank (ADB), will tend to put the emphasis on the develop-
ment of large connecting infrastructures through loans and grants. Conversely, a
corridor programme funded (grants) by a bilateral donor (e.g. the Poverty Reduc-
tion and Alleviation [PRA] Project in Peru) will likely focus on lighter investments
in soft components, such as business development services (BDS) and SME support.
2.4 THEORETICAL FOUNDATIONS OF ECONOMIC CORRIDORS

Economic development is uneven across space, creating disparities in economic
density, incomes and living standards. Such unevenness takes place on all geographic
scales, local, regional and global (World Bank, 2009a). Location remains important
at all stages of development for people, but especially for firms, because the “what”
and “how” of economic production are inextricably linked to location decisions (i.e.
“where” to produce).
A territory with a generous endowment of agricultural resources, such as fertile
agricultural land and water, might be far from being an agricultural growth pole.
On the contrary, it has been argued that being equipped with remarkable natural
resources is more of a curse (Sachs and Warner, 1995; 2001) or, in any case, a mixed
blessing (Wright and Czelusca, 2004). So, if having a vast natural resource base and
large agricultural potential are not enough, what other factors determine agricultural
growth in a country or region? Or, more broadly speaking, why do some economic
activities flourish in a specific space and not in others?
14
See Glossary for a definition of PPPs.
In an effort to answer this question, much of the debate on territorial devel-

opment has revolved around the attributes of spatial development (unevenness,
circular causation and the neighbourhood effect; see explanation in Box 3) as well as
the market forces shaping territorial transformation: agglomeration, migration, and
trade and specialization (World Bank, 2009a).
Territorial transformation is shaped by the interplay of three market forces:
agglomeration economies, trade and specialization, and migration (World Bank,
2009a). Agglomeration can be explained as the force that induces firms to gravitate
towards each other to form clusters or agglomerations. When locating near each
other, firms obtain agglomeration economies, i.e. external economies deriving from
collocation that offer to participating firms both static, cost-based advantages and
dynamic, innovation-related benefits. They are the outcome of the interaction of
increasing returns, trade costs and factor price differences.
SDIs try to develop fully the economic potential of existing firm agglomerations,
while at the same time improving their connectivity with other internal and outer
BOX 3
Attributes of spatial development
Unevenness. The processes of economic growth and integration develop unevenly

across the space economy and are locally and regionally differentiated (Dicken, Peck
and Tickell, 1997; World Bank, 2009a; Yeung, 1998). The tendency of economic activ-
ity to be highly concentrated holds true whether considering the world, countries,
regions or cities (Easterly and Levine, 2001). Thus, a mosaic-like patterning of uneven
development is generated, eventually creating a divide between successful and lag-
ging countries and regions, winners and losers.
Self-reinforcement. Economic growth is self-reinforcing due to a process of “circular

and cumulative causation” because all factors of production flow to the richest areas
revealing important externalities (Easterly and Levine, 2001). Such a notion, developed
by Myrdal (1957), stresses how economic growth is initially spatially polarized and
only later spreads or trickles down to the surrounding areas (see Berger, 2009, for a
detailed explanation of the circular and cumulative causation principle).
Neighbourhood effect. Economic growth is affected by the neighbourhood effect,

by which adjacent territories share economic destinies. The seminal work was carried
out by Lewis (1969), Wilson (1987) and Borjas (1992; 1995), who linked neighbour-
hood externalities and poverty clusters within cities. The same principle is equally
applicable across countries: the level of development of adjacent countries has a
significant impact on the economic growth of a given nation or region (Easterly and
Levine, 1998; Collier and O’Connell, 2007; Roberts and Deichmann, 2011). Accord-
ingly, lagging areas have in common that they are economically distant from places
doing well (World Bank, 2009a).
economic nodes in a large spatial area, so that transport costs and agglomeration
benefits for the total area increase as a whole. An explanation of agglomeration
economies and other related concepts is offered in Box 4.
People, regions and countries specialize in producing certain goods and services
for which they have an advantage. Greater specialization allows them to take full
advantage of economies of scale. Scale economies generate an uneven pattern
of specialization and trade (of both intermediate and final outputs), and market
dominance, ultimately creating an irregular mosaic of economic development across
regions and countries.
If trade is largely shaped by economies of scale, then those economic regions
with most production will be more profitable and will therefore attract even more
production. This is known as the “home market effect”, i.e. the “gravitational force”
that attracts imperfectly competition towards large markets, creating geographic
agglomerations of economic activities (Ottaviano and Thisse, 2004). This implies
that instead of spreading out evenly around the world, production will tend to
concentrate in a few locations, which will become densely populated (by firms and
people) and will also enjoy higher levels of income.
The home market effect is enlarged by some amplifiers that give rise to circular
causation in locational decisions, according to the core-periphery model. Such
amplification effect ends up creating the uneven development of two regions: a
“core” region where the majority of the population concentrate, which specializes in
a competitive economic sector, leaving a small minority in the “periphery” to live off
a less competitive activity (Krugman, 1991). The core-periphery model also explains
north-south uneven development. For over a century and a half global economic
activity has concentrated in the Northern Hemisphere, creating an uneven display of
economic tissue, far denser in the north (core) than in southern peripheral regions.
Economic integration,15 i.e. the abolition of the various restraints of trade
between nations, has remained central in the territorial debate, whether it refers to
integrating cross-border regions or lagging and leading countries.
Migration and factor mobility in general, happen on three geographic scales: the
urban-rural scale, between lagging and leading regions within a country, or between
countries. Human capital moves to where it is abundant, not scant (World Bank,
2009a). The reality is that skilled migrants naturally seek places where workers with
similar high-level specialized skills abound. Recognizing scale economies and their
interaction with the mobility of people and products implies changing conventional
ideas about what is needed for economic growth. According to the World Bank
(2009a), countries should facilitate labour mobility if they wish to prosper. The
willingness and ability of workers to move seems to be an adequate gauge of their
economic potential and desire for advancement. The implication for policy-makers
is that the market force which pulls skilled people together should not be interfered
with, nor underestimated. Smoothing the flow of educated migrants, upgrading
their capacities, while minimizing the potential adverse effects of such migration,
are important elements of SDIs.
15
See Glossary.
BOX 4
Definition of economies of scale and scope, and agglomeration forces
Economies of scale are concerned with the reductions in cost per unit resulting from
increased production. They can be internal to the firm (when the cost per unit depends on
the size of the firm), or external when the lowering of costs is due to external factors (e.g.
proximity to workers, customers and people with new ideas).
External economies of scale will increase the productivity of an entire industry,
geographic area or economy. The external factors are outside the control of a particular
company, and encompass positive externalities that reduce the firm’s costs. Such positive
externalities can be localized producing agglomeration economies called localization econo-
mies, which can be defined as “cost reductions because economic activities are located in
one place” (McDonald and McMillen, 2007). Such economies of scale are shared by firms
in the same industry and location. The decision of firms regarding their location might be
altered by infrastructure investments capable of modifying the equation of transportation
costs, or as Carciofi (2012; p. 67) notes: “the development of infrastructure rebalances the
centripetal and centrifugal forces behind locational decisions”.
There are more generally available external economies of scale that thrive on economic
density or urbanization economies (World Bank, 2009a). In spite of the clear correlation
between the size of the settlement and the type of economies of scale that they are likely to
provide, “the size of settlements matters less than their function” (ibid.). For example, with
reasonable transport costs, towns can be large enough to facilitate internal scale economies
but not to generate external ones, whereas medium-size cities are often large enough for
localization economies due to their relatively thick input markets,16 but not for urbanization
economies – especially those involving knowledge spillovers − generated mainly by large
cities. The main implication for policy-makers is to focus on the functions of cities as nodes
of high economic density and make the most of their dynamic business environment.
The causes or microfoundations of agglomeration include the following centripetal forc-
es: labour market pooling, input sharing and knowledge spillovers (Marshall, 1890), as well
as economies derived from concentration of demand and natural advantages. These forces
are external factors to the firms, but internal to the industry, generating shifts in their cost
curves and enhancing the economic performance of the agglomerated firms. Some of the
various aspects of economic performance from clustering are enhanced innovation; higher
input (labour/capital) demand or price (wage/asset value); greater productivity; reduced
costs; and location decisions or firm “births” (Cohen and Morrison Paul, 2007).
The term economy of scope was coined by Panzar and Willig (1981) to describe a rather
intuitive property of production consisting of the cost advantages derived from the scope
(rather than the scale) of the firm. It can be defined as the reduction of an enterprise’s costs
deriving from enlargement of scope, either as a result of increasing the number of different
goods produced or of producing in more than one location (Teece, 1980). The existence
of economies of scope in production is the necessary condition for outsourcing to occur
because, without it, vertical disintegration along the global value chain has no advantage in
reducing the production costs of the intermediate products.
16
See Glossary.
A new paradigm of territorial development. The dominant approach for foster-

ing economic integration has evolved over the years, shifting from growth poles,
industrial complexes/districts and clusters, to more rural-urban development
approaches and subsequently to a new wave of SDIs, among which stand out the
concepts of clusters and economic corridors. These approaches diverge as to the
type of agglomeration economy highlighted (urbanization economies deriving
from between-industry interactions or localization economies arising from within-
industry economic interactions) and the preferred tool (e.g. growth centre/pole,
cluster or economic corridor) (Karlsson, 2008).
New theoretical developments in the 1990s and 2000s have brought attention
back to the importance of location in the face of escalating globalization pres-
sures, and have come up with new pro-strategic trade arguments that run counter
to conventional economic wisdom and practice. Such developments back up the
adequacy of strategic trade interventions such as SDIs, when specialization in
industries and sectors responds to the existence of competitive advantages, good
design and implementation practices are followed and safeguard mechanisms are
properly introduced. Consequently, SDIs by Southern Hemisphere countries to
attract investments to regions with growth potential are, by and large, seen as
suitable, as long as interventions focus on reducing transport and trade costs and
helping achieve economies of scale; equal attention is paid to hardware and software
components;17 and multistakeholder governance is ensured as a means to avoid
selecting areas, sectors and industries for the wrong reasons (on political grounds
and on the activities of lobby and pressure groups, among others) (Ambrosio-
Albalá and Bastiaensen, 2010).
Over the years, the dominant approach to explain and eventually foster eco-
nomic agglomeration and growth in specific areas has been moving along a learning
curve, in a way that each new model has learned from the mistakes of the preceding
ones. Furthermore, all along this evolutionary process, emerging economic (globali-
zation), political (centralization) and social (demand for better governance) forces
have been factored into the equation, modifying long-held views. Nowadays, the
body of knowledge about agglomerations and dispersion forces is quite mature and
helpful to understand much better why and how firms concentrate in a spatial area.
The question is whether and how spatial planners and policy-makers can attract
firms to SDIs. The theory seems to say that this is possible when there is already
economic density and potential that can be maximized. Therefore, blind support
to backward regions with little potential for economic growth, through spatial
development programmes, is plainly objectionable.
SDIs should focus on areas with viable, but untapped growth potential and work
to remove bottlenecks to growth, both in terms of lacking connective infrastructure
(especially for landlocked regions) and the business environment, so that software
and hardware improvements are aligned for maximizing the returns on investments.
The subsequent sectoral targeting should be carried out through multilevel and
multistakeholder governance systems with proper check-and-balances that take into
17
See Glossary.
account both private and public sector interests, in an effort to avoid an arbitrary
selection (not on economic grounds) of prioritized sectors and industries, which has
been a recurrent feature of traditional development interventions.
The theory also seems to highlight the advantages of spatial development
approaches for enhancing regional integration. Falling transport costs increase trade
more with neighbouring, not distant, countries. With a decline in transport costs,
countries should trade more with countries that are further away. But trade has
become more localized than globalized. Countries trade more with nations that are
similar, because more than ever the basis of trade is the exploitation of economies of
scale, rather than differences in natural endowments. The main rationale behind this is
that falling transport costs make specialization possible. The resulting policy implica-
tion is that falling costs change the composition of international trade and increase
the sensitivity to such costs. Therefore, for late developers, policies to decrease trade
and transport costs should be a substantial element of their growth strategies (World
Bank, 2009a). This explains why economic integration is increasingly important.
The debate is still open in terms of identifying the best practices for incorporating
agricultural development strategies into spatial development programmes, because
of the specificities of the agricultural sector (e.g. dependence on natural resources
endowment and highly influenced by climate change).
2.5 CORRIDORS AND OTHER TERRITORIAL-BASED APPROACHES

FOR ACCELERATING AGRIBUSINESS GROWTH AND ATTRACTING
INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE
The conceptual issues explained in the previous sections are also applicable to the
extended agricultural sector. The interactions among increasing returns at the firm
and industry levels, agricultural transport costs and labour force mobility cause spa-
tial economic structure to emerge and evolve. As a result, food “hotspots” emerge
in some regions and countries.
Adherents of the strategic trade theory argue that it is possible to create the
conditions for creating or further developing existing food hotspots in specific
territories by adopting agrobased SDIs. Therefore, they advocate the provision of
an enabling environment and (hopefully) smart incentives that encourage a critical
mass of agribusiness firms to locate in a specific area. Once the critical threshold is
breached, the agglomeration of companies and service providers will attract new
players and a sort of snowball effect takes place.
There are two ways to go about this. An SDI can be put in place with the sole
purpose of accelerating agribusiness development or an agricultural component can be
added to an already existing SDI. In fact, ongoing SDIs with roots firmly entrenched
in the transport or industrial sectors (transport corridors and industrial parks, respec-
tively) can accumulate over time progressive layers of spatially bounded multisectoral
interventions. One of the sectors most frequently contemplated in SDIs is agriculture
or agribusiness. By becoming multisectoral, these SDIs can multiply the positive
impacts of the initial investments in transport or industrial infrastructure.
Agrobased SDIs have the triple purpose of helping agribusiness players to adapt
to the metatrends making the agriculture sector evolve at an unprecedented pace;
create value networks among agribusiness actors in the target territory; and contrib-
ute to attracting transformative investments in the sector.
The concept of corridors has its roots firmly entrenched in the transport sector
but, over time, it has accumulated progressive layers of spatially bounded interven-
tions targeting multiple economic sectors.
One of the keys to designing agrobased corridors successfully is to understand
the main features of the extended agricultural sector and the metatrends18 reshaping
it, as seen in Box 5. Agriculture is evolving from its traditional form – a labour-
intensive and lesser capital-intensive sector dominated by unskilled workers,
and characterized by long and fragmented supply chains – to become a modern
economic activity that uses skilled labour. It is also highly standardized, input
intensive, concentrated and capital and technology intensive (e.g. some tractors now
deploy global positioning systems [GPS] to apply fertilizers to cropland more pre-
cisely). This transformation is being spurred on by several factors, such as income
and population growth; urbanization and female employment; political economy
change; and modern technology (FAO and UNIDO, 2009).
Countries and regions where agribusinesses are not agglomerating spontane-
ously, or not at the desired pace, might wish to catalyse this agglomeration process
by implementing SDIs targeting the sector. Furthermore, the overwhelming pres-
sure exerted by these compounded trends on developing country agribusiness
forces them to become more global while remaining competitive and sustainable.
Paradoxically, the more globalization forces expose the agricultural sector to far-
reaching changes, the more local solutions emerge to foster local competitiveness,
and the more attention is being paid towards agro spatially bound initiatives.
The last few years have seen a surge of interest in developing country agriculture
by both countries and multinational firms; the former in support of their food secu-
rity strategy and the latter motivated by potentially high returns on investment. On
the other hand, some developing nations are making strenuous efforts to mobilize and
facilitate foreign and domestic investment in their agricultural sectors. For them, FDI
is a potentially important contributor to filling the investment gap, which has been
identified as an underlying cause of the recent food crisis and the difficulties develop-
ing economies encountered in dealing with it (FAO, 2009a). Economic corridors can
be instrumental in rallying investments in targeted sectors, including agriculture.
Investment in agriculture is positively correlated with production levels, food
security and poverty reduction (FAO, 2012b). Regrettably, over the past decades,
the level of agricultural investment in developing economies has declined, mostly
due to the downturn in public and international donor spending.19 Yet, to feed the
world’s growing population, investment in primary agriculture and downstream
services (including storage, processing and market facilities) needs to be augmented
by 50 percent in 2050, i.e. US$83 billion per year of additional investments (FAO,
2009b; 2012a; 2012b). The gap in required investment levels is even larger when
considering public goods that are essential for agribusiness development such as
roads, electrification and large-scale irrigation projects that were not included in the
above estimate.
18
See Glossary.
19
The share of official development assistance directed to agriculture has fallen from around 10 to
5 percent (Hallam, 2011).
BOX 5
Metatrends shaping the agricultural sector
According to Reardon and Barrett (2000), five major trends are fuelling this evolution.
1. Increase in scale and concentration at the firm, spatial and sectoral levels. Agricultural
supply chains are progressively operating at a global scale thanks to a policy environ-
ment that encourages free trade, as well as to the availability of new production, pro-
cessing and logistics technologies (FAO and UNIDO, 2009). On the one hand, globali-
zation forces are generating the spatial agglomeration of agroprocessing firms and,
on the other, a faster pace of concentration and vertical integration in agricultural
chains. These processes result in a diminishing number of economic players (a few
multinational agribusiness companies) exerting their power over global buyer-driven
supply chains, at least for many commodities (Reardon and Barrett, 2000; Reardon,
Pingali and Stamoulis, 2006; Ruben, Slingerland and Nijhoff, 2006).
2. Changes in commodity and subsector composition on two fronts. First, broad com-
modity shifts associated with rising incomes20 and with new or expanding existing
uses (fuel21 and feed, respectively) are taking place. The second front is the so-called
“supermarket revolution”, occurring in both developing and industrialized markets
(Reardon, Timmer and Minten, 2010). This term alludes to the consecutive waves22
of diffusion of supermarkets (referring to all sorts of modern retail activities) in the
developing regions of Africa, Asia and Latin America. The revolution or rise of super-
markets has manifested itself in sales growing at a spectacular rate, far faster than
GDP growth rates. It has had profound impacts on agrifood systems, some positive
(lower food prices for consumers and market opportunities for farmers and proces-
sors producing quality-differentiated food products), and some negative (exclusion
of small-scale actors ill-equipped to meet supermarkets’ stringent procurement
requirements) (Reardon et al., 2003; Reardon, Timmer and Minten, 2010). The rise
of modern retailing has come at the expense of the traditional wholesale channel.
3. Amplified multinationalization and export orientation of agricultural supply chains.
4. Mass adoption of coordination and control mechanisms (e.g. grades and standards)
reshaping the governance of agricultural chains.23
5. The use of production factors has been intensified at all stages of the value chain
(production, processing and retailing) in terms of professionalization of the labour
force and higher capital intensity.
20
When consumers move up into higher-income brackets they tend to substitute starchy food staples
with higher-value, more processed and convenient food products, such as fruit and vegetables, oils
and processed grains, meat and dairy products (FAO and UNIDO, 2009).
21
Several food crops (e.g. corn, soybeans, sugar cane and wheat) are increasingly being grown for
producing biofuel.
22
The first wave swept much of South America, East Asia (outside China) and South Africa; the
second wave, Mexico, Central America and much of Southeast Asia; the third wave, China, India
and Viet Nam; and the last is currently taking place in Bangladesh, Cambodia and West Africa
(Reardon, Timmer and Minten, 2010).
23
See Glossary for a definition of governance and value chains.
BOX 5 (Continued)
A sixth trend could be added, pertaining to the renewed emphasis on sustainability,

expressed in the search for greener, socially responsible and economically viable agricultural
chains (Pannell and Schilizzi, 1999; Meadowcroft, 2007; Morgan, 2008).
To make up for the fall in public spending and overseas development aid, many
developing economies are committed to promoting investment in their agricultural
sectors.24 Seemingly, these efforts have paid off: inward FDI stock in developing
country agriculture increased 6.4-fold between 1990 and 2009 (UNCTAD, 2011)
and has risen even more since (FAO, 2012a). In the same period, inward FDI stock
in food and beverages increased 6.1-fold in developing countries and 6.4-fold in
developed countries (UNCTAD, 2011). See Table 3 for further information.
The rise of FDI inflows into developing country agriculture is particularly
remarkable, given the current worldwide downturn in FDI, induced by the global
economic crisis (UNCTAD, 2012). This success is compounded by the supe-
rior performance of developing and transition economies – investments to these
economies surged, increasing their share in global FDI flows to 45 percent in 2011
(UNCTAD, 2012). FDI activity in primary and extended agriculture in recent years
has been exceptional, particularly in a context where FDI flows into most industries
substantially declined (UNCTAD, 2009a; 2011; 2012). In spite of this recent spike,
the share of total FDI that is directed to agriculture remains low with respect to
other sectors.25 A survey performed by FAO (2012a) revealed that FDI flows into
Table 3
Estimated world inward FDI stock by sector and region in million US$, annual
Agriculture, hunting, Food, beverages and tobacco All sectors
forestry and fishing
1990 2009 1990 2009 1990 2009
Developed
3 733 16 328 76 100 487 649 1 562 296 12 296 706
economies
Developing
4 850 31 053 11 036 67 670 517 200 5 120 182
economies
Transition
– 2 995 – 13 172 1 652 624 121
economies
Source: UNCTAD (2011; Annex Table 24); and UNCTAD-STAD, FDI series. Inward and outward foreign direct
investment flows and stocks. Annual, 1980–2011.
Note: US$ at current prices and current exchange rates in millions.
24
Traditionally, investment promotion has been associated with attracting and facilitating FDI to a
particular country, but has evolved over time to become applicable to lower levels of the economy,
such as channelling investment into specific cities or regions within a country or a particular economic
sector. Furthermore, the concept has since been applicable to domestic private investment as well.
25
The absence of available updated FDI data by sector/industry for developing countries precludes a
deeper analysis of sectoral differences.
agriculture were below 5 percent of total FDI inflows, and in the majority of cases
even under 2 percent.
The reasons behind this FDI surge are manifold and complex. They include both
cyclical factors (e.g. the steep rise in agricultural commodity prices in 2007–2008,
speculation on land and other natural resources, and search for alternative energy
sources) and structural drivers (e.g. growing population, rising consumption rates
and market demand for food and biofuels) (FAO, 2012a; 2012b). The bulk of
agricultural FDI flows has been directed to the food manufacturing sector, while
primary agricultural production accounted for less than 10 percent between 2006
and 2008 (FAO, 2012a). Nonetheless, this statement might need some qualification,
as FDI in the primary agricultural sector is difficult to track back (ibid.).
The recognition that private sector investment is needed to leverage addi-
tional funds, expertise and other resources for agricultural growth has pushed public
policy to provide an enabling environment for private investments in agribusiness.
Over the years, developing countries have adopted a wide range of economic
prescriptions for creating enabling environments and “getting markets right” (FAO
and UNIDO, 2009; p. 136). These prescriptions include a variety of agricultural and
macroeconomic policies that have a direct impact on the agricultural sector. Cases in
point are the deregulation of the economy, the opening up of domestic markets to
world markets, the privatization of state-owned enterprises, increased investments
in research and development, the provision of rural credit, and minimum guaranteed
producer prices (FAO and UNIDO, 2009; FAO, 2012a). The resulting improved
business climate is expected to attract capital to invest in specific firm strategies and
general market-based solutions that contribute to both development and economic
growth goals (FAO and UNIDO, 2009).
More recently, developing country governments have become keen on fostering
collaborative and inclusive business models, by which investors seek to promote
the involvement of smallholders and local investors. This practice is seen as a means
to “pre-empt local conflict and international criticism through building up local
participation from the start” (FAO, 2012a; p. 80). Consequently, host countries are
striving to put in place appropriate policy and regulatory frameworks to ensure
that the developmental benefits of agriculture FDI are maximized, by inter alia,
employment generation, transfer of expertise and technology, and infrastructure
development. They also try to minimize risks, such as the potential exclusion of
small farmers and firms, land tenure conflicts and negative environmental impacts
(UNCTAD, 2009a; FAO, 2012a).
These efforts to enhance the business climate have translated into improved
institutional frameworks for agribusiness investment promotion, i.e. setting up or
strengthening institutions responsible for disseminating information, or attempting
to create an image of the investment site. These institutions also provide investment
services for prospective investors in the agriculture and agribusiness sectors (Wells
and Wint, 2000).
The increased attention given by governments to investment promotion can be
illustrated by the more than fourfold increase in the number of investment promo-
tion agencies (IPAs) set up from 1980 to 2004 in developing countries. Current
estimates place the number of regional and city-level IPAs at 8 000 worldwide (VCC
and WAIPA, 2010). Another institutional option for investment promotion found in
developing countries is to create an Agribusiness Unit within the Ministry of Agri-

culture with a mandate to, among other things, mobilize and facilitate investments in
the agribusiness sector. A third option is to set up a PPP Unit with the role of lev-
eraging private investments in various sectors of the economy (FAO, forthcoming).
Depending on the financial resources and technical capacity of the investment
agency and/or institutions involved, a country can design clever ways to package
agribusiness investment promotion activities according to their targeted audience
and priorities. For instance, investors can be encouraged to invest in specific
agriculture value chains, clusters or subsectors that enjoy a particular competitive
advantage. Alternatively, investment promotion can also be used to attract and
facilitate agribusiness investments in specific geographic areas, using SDI tools such
as economic or growth corridors, agrifood parks and SEZs. The ideal way for a host
country and the private sector to build a successful agriculture sector investment
programme might be a blend of all of these functions and approaches as suited to
the country’s particular investment and economic context.
Corridors, SEZs and other spatial development tools are particularly used to
attract FDI in countries where infrastructure is a challenge (FAO, 2012a). For exam-
ple, evidence from the United Republic of Tanzania suggests that SDIs – through
cost-sharing with the private sector, infrastructure development and implementa-
tion of the regulatory environment combined with efficient administration – could
provide the best possible business environment for agricultural growth within a
limited geographic area (ibid.).
25
Chapter 3
Overview of the corridor profiles
Chapters 3 to 7 describe a series of economic corridor initiatives in developing

Africa, Asia and Latin America. First, a mapping exercise is carried out to identify
economic corridor initiatives in developing regions. The mapping is presented in
this chapter, accompanied by a snapshot of the regional economic and policy
background against which these corridors emerge and evolve. Three policy aspects
are highlighted: those regarding regional trade, transport integration and regional
agricultural policies and institutions. These elements will be further developed in
subsequent chapters.
The corridor cases identified are then filtered through a set of criteria listed in
section 3.1. Finally, an introduction to the selected corridor experiences is provided
before the following chapter, which discusses the cases in detail.
3.1 INTRODUCTION TO THE MAPPING AND SELECTION EXERCISE

OF ECONOMIC CORRIDOR INITIATIVES IN DEVELOPING COUNTRIES
Over 30 corridors have been mapped out, as summarized in sections 3.2 to 3.4. The
detailed list can be consulted in Annex 1.
Regional differences have been found among these corridor interventions in
terms of geographic scope, lead conveners and stakeholders involved, as well as of
the tools used (following the corridor typology presented in section 3.3), as will be
explained later. Furthermore, even though all corridors observed have similar gen-
eral objectives (contributing towards enhancing competitiveness, poverty reduction
and job creation), they do not necessarily seek the same specific goals: for example,
some corridors pursue primarily trade integration, whereas others privilege food
security. To improve the understanding of the possible rationale behind these dif-
ferences, the mapping of initiatives is presented together with an assessment of the
economic and policy environment in which they take place.
This mapping exercise is followed by the selection of a number of corridor
experiences through the application of the following eligibility criteria.
The existence of an agricultural component is a sine qua non condition.
The timeline of the initiatives is also taken into account: the longer the corridors
have been in operation the better.
A preference is also expressed for a diversity of approaches, geographic scope,
drivers and stakeholders.
A maximum of three corridors per region will be selected in order to avoid
diluting analytical efforts by examining a large number of initiatives only in a
superficial manner.
3.2 AFRICAN CORRIDORS AND THEIR POLICY BACKGROUND

Mapping of African corridors. Several African countries have crafted credible plans
to transform the existing transport corridors into economic corridors. A summary
of the economic corridors mapped out in the region is presented in Table 4. These
interventions have been designed to fulfil five purposes: (i) enhancing physical
connectivity; (ii) ensuring food security; (iii) supporting regional trade integration;
(iv) nurturing agricultural growth; and (v) absorbing the expansion of large urban areas
and cleverly connecting various spots of urban growth, including their hinterlands.
Out of a total of 14 corridors identified, two have been selected for in-depth
analysis because they meet the criteria more fully. These two economic-corridor
initiatives have been launched to foster agricultural growth specifically: the Beira
Agricultural Growth Corridor (BAGC) linking the homonymous port, in Mozam-
bique, with three central provinces of the countries with high agricultural potential;
and the Southern Agricultural Growth Corridor of the United Republic of Tanzania
(SAGCOT), which connects southern Tanzania to the port of Dar es Salaam.
Policy and institutional framework. Corridors repeatedly appear in the main Afri-
can policies and programmes. Table 5 captures how the main institutions operating
TABLE 4
Corridors identified in Africa
Corridor name Countries involved Cases selected
Abidjan-Ouagadougou Corridor Côte d’Ivoire and Burkina Faso No
BAGC Mozambique Yes
Central Corridor United Republic of Tanzania, Burundi, Democratic No

Republic of the Congo (DRC), Rwanda and Uganda
Coast-to-Coast Corridor Mozambique, Swaziland, South Africa, Botswana No

and Namibia
Dakar-Touba Corridor Senegal No
Gauteng City Region Corridor South Africa No
Greater Ibadan Lagos Accra Benin, Ghana, Nigeria and Togo No

(GILA) Corridor
Lamu Growth Corridor Ethiopia, Kenya and South Sudan No
Maputo Development Corridor Mozambique and South Africa No
Nacala Corridor Mozambique, Malawi and Zambia No
Northern Corridor Kenya, Uganda, Burundi, Rwanda and the DRC No
North-South Corridor South Africa, Zimbabwe and Zambia No
SAGCOT Tanzania (plus Zambia and Malawi) Yes
The Greater Cairo Region corridors: Egypt No

(1) Cairo-Suez; (2) Cairo-Alexandria;
(3) Cairo-Ismaïlia

Chapter 3 – Overview of the corridor profiles 27
in the region at three levels (continental scale, regional trade blocs and in the context
of global and regional partnership platforms)26 imagine the role of economic and
transport corridors in the continent.
TABLE 5
Policy and institutional framework informing the development of African corridors
Institutions Regional policies and programmes
Level Institutions
Continental African Union (AU)

This is a pan-African organization Agriculture: the Comprehensive Africa
founded in 2002, whose goal is Agriculture Development Programme
to support political and economic (CAADP) is one of NEPAD’s programmes
integration among its 54 Member
Nations Transport: the Programme for
Infrastructure Development in Africa
AU’s strategic framework for socio- (PIDA) is led by the African Union
economic development is the New Commission (AUC) and the NEPAD
Partnership for Africa’s Development Secretariat and executed by the African
(NEPAD). This manages a number of Development Bank (AfDB).
programmes in six thematic areas,
including agriculture/food security, Industrial development: the NEPAD
regional integration and infrastructure Secretariat and the AfDB put corridors
at the core of their “Plan of Action for
Acceleration of Industrialization”
Regional trade COMESA-EAC-SADC (CES) Tripartite

blocs Common Market for Eastern and The CES Tripartite has devised a regional
Southern Africa (COMESA) strategy based on infrastructure and trade
improvements along corridors
East African Community (EAC)
The SADC Regional Agricultural Policy
Southern African Development identifies corridors as key to achieve its
Community (SADC) specific objectives (EDCPM, 2013)
Regional and Grow Africa

multinational This is a regional partnership platform Grow Africa is taking a coordinating
partnership that seeks to accelerate investments in role in all of the new corridors (e.g.
platforms African agriculture in support of CAADP agricultural growth corridors in Tanzania
and national priorities and Mozambique) to see that they
support the goals of CAADP
It is co-convened by AUC, NEPAD and
the World Economic Forum (WEF)
WEF’s New Vision for Agriculture WEF aligns with the African-led CAADP
Multinational partnership platform and supports the above corridors as part
of its global programme
G8’s New Alliance for Food Security The New Alliance also aligns with CAADP
and Nutrition and uses Grow Africa’s approach, which is
Multinational partnership platform based on WEF’s New Vision for Agriculture
framework
Source: www.au.int; www.comesa-eac-sadc-tripartite.org; www.growafrica.com; EDCPM, 2013; www.weforum.

org/issues/agriculture-and-food-security [last accessed August 2013].
26
A partnership or multistakeholder platform engages multiple partners across government,
companies, farmers, civil society and others.
Against this backdrop, African governments have recognized through the

African Union (AU),27 an organization that promotes pan-African cooperation,
the need for cohesive strategies for infrastructure development. As seen in Table 5,
the AU acknowledges in its Programme for Infrastructure Development in Africa
(PIDA) that corridor initiatives represent a promising means to improve infrastruc-
ture provision, develop transport routes and, through them, catalyse multisectoral
growth (African Union, 2007; Farooki, 2012). Along these lines, AU’s planning
and coordinating technical body – the New Partnership for Africa’s Development
(NEPAD) Secretariat – and the African Development Bank (AfDB) proposed using
economic corridors as a strategy for regional integration in their Action Plan for
the Acceleration of Industrialization (African Union, 2007). Launched in 2007, the
plan underscored the promotion of economic or development corridors and other
SDIs in Africa, highlighting two of their defining traits: (i) the focus on resource-
based anchor investments that require large infrastructure interventions; and (ii) the
emphasis on developing linkages to the local economy through feeder infrastructure
and business linkages to SMEs (World Bank, 2010).
The AU is also making efforts to ensure that corridor initiatives in the continent
are in line with the priorities highlighted in NEPAD’s agricultural programme, the
Comprehensive Africa Agriculture Development Programme (CAADP). While
CAADP itself makes no explicit mention of economic corridors, it recognizes the
importance of collaborating with the private sector and of using regional approaches
to addressing food security, which are the cornerstones of the corridor strategy.
To accelerate investments in African agriculture in support of CAADP, the Grow
Africa partnership platform was initiated in 2011. Grow Africa has the corridor
approach as a core area of work in the United Republic of Tanzania, Mozambique
and Kenya.
Another partnership platform, the World Economic Forum (WEF)28 launched
in 2009 a global initiative called the New Vision for Agriculture. Several agribusi-
ness multinational companies that are Industry Partners of the Forum lead this
initiative,29 which aims to address three imperatives: ensuring food security;
spurring agricultural production in an environmentally sustainable manner; and
engendering inclusive economic growth (WEF, 2010). The initiative draws attention
to innovative models for collaboration (business-led and market-based solutions
explicitly linked to national and sectoral development priorities), which can spark
the necessary step change needed in developing country agriculture (WEF, 2010;
2012). One of the models identified is that of agricultural corridors. Thus far, the
27
For further information about the AU, see: www.au.int [last accessed July 2013].
28
WEF is “an independent international organization committed to improving the state of the world
by engaging business, political, academic and other leaders of society to shape global, regional and
industry agendas”. www.weforum.org [last accessed August 2013].
29
The 28 global companies that champion the initiative at the global level are AGCO Corporation,
A.P. Møller-Maersk, BASF, Bayer CropScience, Bunge, Cargill, CF Industries Holdings, The
Coca-Cola Company, Diageo, DuPont, General Mills, Heineken, METRO Group, Mondelez
International, Monsanto Company, The Mosaic Company, Nestlé, Novozymes, PepsiCo, Rabobank
International, Royal DSM, SABMiller, Sinar Mas Agribusiness and Food, Swiss Reinsurance
Company, Syngenta International, Unilever, Wal-Mart and Yara International (WEF, 2013).
initiative has engaged business leaders, governments, academia, civil society, and the
donor and investor community to implement two country-level agricultural cor-
ridor partnerships: SAGCOT in the United Republic of Tanzania and the BAGC
Initiative (BAGCI) in Mozambique (WEF, 2012; Jenkins, 2012). Other agricultural
development models identified by New Vision include a breadbasket30 project in
Ghana; a horticultural value chain intervention in Honduras; and a transforma-
tion plan for the agricultural sector in Morocco (ibid.). Currently, WEF supports
multistakeholder partnerships in 11 countries across Africa, Asia and Latin America
(WEF, 2013).
Another multilateral partnership aligned with CAADP and developed in col-
laboration with WEF and Grow Africa is G8’s New Alliance for Food Security
and Nutrition. This alliance is formed by African and G8 governments that commit
public sector funding and action to enable agriculture investments, and by multi-
national and African private companies that have committed to invest over US$3
billion to boost African food security. The United Republic of Tanzania was one of
the original countries participating in the alliance, and Mozambique followed suit.
A similar approach is shared by the Tripartite, an umbrella institution
that gathers together three sub-Saharan African trading blocs: the Common
Market for Eastern and Southern Africa (COMESA), the East African Com-
munity (EAC) and the Southern African Development Community (SADC).
The Tripartite has devised a regional growth strategy also based on the design
and implementation of infrastructure and trade interventions along corridors in
eastern and southern Africa.31
3.3 LATIN AMERICAN CORRIDORS AND THEIR POLICY BACKGROUND

Mapping of Latin American corridors. In Latin America and the Caribbean (LAC)
there are some incipient corridor initiatives that foster integration sectoral processes.
Individual country corridors are much more commonplace. Two types of corridor
initiatives can be distinguished at the country level. The first is a donor-supported
corridor programme that relies on the provision of business and technical advisory
services to firms (mostly SMEs), producers and other actors from various sectors,
comprising agriculture. The second type of corridor is spearheaded by the private
sector, and emerges to extract strategic commodities (e.g. biofuel and edible oils) to
international gateways.
Table 6 synthesizes the information on LAC corridors presented in this section.
Among these corridors, the Peruvian case emerged as one of the most innovative
and with most impact on growth and agricultural development.
Policy and institutional framework. Regional trade blocs in LAC (see Table 7) are
becoming involved in the application of the corridor approach. A case in point is
the Union of South American Nations (UNASUR),32 which is responsible for the
30
See Glossary.
31
www.comesa-eac-sadc-tripartite.org [last accessed May 2013].
32
UNASUR, established in 2008, encompasses all 12 South American countries. For further
information see: www.unasursg.org
TABLE 6
Corridors identified in Latin America and the Caribbean
Integration of Regional Infrastructure in South Argentina, Plurinational State No

America (IIRSA) corridors of Bolivia, Brazil, Chile, Colombia,
Ecuador, Guyana, Paraguay, Peru,
1. Andean Corridor Suriname, Uruguay and
2. South Andean Corridor the Bolivarian Republic
of Venezuela
3. Capricorn Corridor
4. Paraguay-Parana Waterway Corridor
5. Amazon Corridor
6. Guyanese Shield Corridor
7. Southern Corridor
8. Central Interoceanic Corridor
9. Mercosur-Chile Corridor
10. Peru-Brazil-Bolivia Corridor
Mesoamerican or Pacific Integration Corridor Belize, Costa Rica, El Salvador, No

Guatemala, Honduras, Nicaragua,
Panama, Colombia, Mexico
and the Dominican Republic
Caribbean Integration Corridor Caribbean countries No
PRA Corridors in Peru Peru Yes
Subnational Corridors Bolivia No
Subnational Corridors Guatemala No
Subnational Corridors Honduras No
Subnational Corridors Paraguay No
Soybean export Corridors Argentina No
Sugar-cane ethanol export Corridors Brazil No
implementation of the Initiative for the Integration of Regional Infrastructure in

South America (IIRSA). What started as a purely transport corridor effort is now
moving into a more comprehensive and multisectoral intervention that falls into the
realm of economic corridors. UNASUR is responsible for smoothing and facilitat-
ing that transition.
In the near future, the Inter-American Development Bank (IaDB) is expected to
play an important role in advancing regional corridors, seeing that its new strategy
to support competitive global and regional integration is entirely based on the
concept of economic corridors (IaDB, 2011).
In recent years, regional corridor initiatives have been launched to foster inte-
gration in South America, Central America and latterly in the Caribbean. These
corridor programmes operate through intergovernmental collaboration for the
development of software-hardware complementarities along key subregional cor-
ridors (Giordano, 2012).
TABLE 7
Policy and institutional framework informing the development of LAC corridors
Regional policy Latin America and the Caribbean
Regional trade blocs Union of South American Nations (UNASUR)

-- Andean Community (CAN)
-- Southern Common Market (Mercosur)
Caribbean Community and Caribbean Common Market
(CARICOM)
Central American Integration System (CAIS)
Regional agricultural policy/body Central American Agricultural Council (CAC)

and the Central American Agricultural Policy (CAAP)
Southern Agricultural Council (SAC)
Regional transport integration Initiative for the Integration of Regional Infrastructure

in South America (IIRSA): shifting from transport hubs
to economic corridors
Regional development bank Inter-American Development Bank (IaDB) bases its current
regional integration strategy on the economic corridor model
In 2000, 12 LAC countries (Argentina, the Plurinational State of Bolivia, Brazil,

Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and the
Bolivarian Republic of Venezuela) launched IIRSA.33 It encompasses several inte-
gration corridors or hubs as shown in Figure 2.
In a first phase (2000–2010), IIRSA focused exclusively on activities regarding
regional transport, energy and communication infrastructure development (Carciofi,
2012), with over a threefold increase in infrastructure investments from US$4.3 bil-
lion in 2004 to US$14 billion in 2010 (IIRSA, 2010). In the current and second phase,
IIRSA operates under the UNASUR framework. This regional organization is
responsible for providing more strategic and political guidance that will likely foster
other dimensions of South American integration aside from infrastructure, such as
trade facilitation and policy harmonization (Carciofi, 2012; IIRSA, 2010). In spite of
the remarkable progress made so far, IIRSA corridors have not evolved yet into the
economic corridor stage, and therefore are not further studied.
Although regional economic corridors are incipient in Latin America – yet
gaining momentum – there are several countries in the region that have promoted
national economic corridors in (subnational) regions or provinces (USAID, 2000;
2003; 2008a; 2008b; 2010). These include the Plurinational State of Bolivia, Paraguay
and Peru (USAID, 2008a), as well as Guatemala34 (USAID, 2000) and Honduras35
(USAID, 2003). The large majority of such corridor programmes are sister projects
33
www.iirsa.org [last accessed December 2012].
34
Emerging corridors in the Zonapaz region (Huehuetenango, Quiché, Alta Verapaz, Baja Verapaz,
Chimaltenango and the Peten).
35
Two corridors on the Atlantic coast and the south of Honduras (in Spanish the Corredor Atlántico
and the Corredor del Sur).
figure 2
IIRSA integration corridors or hubs
Guianese Shield hub
Andean hub
Central Interoceanic hub
Amazon hub
Peru-Brazil-Bolivia hub
MERCOSUR-Chile hub
Capricorn hub
Paraguay-Panama
Waterway hub
Southern hub
Southern Andean hub
that have replicated the pioneer experience of the United States Agency for Interna-
tional Development (USAID) in Peru in the late 1990s, known as the PRA Project.
These corridors are serviced by Economic Services Centres (ESCs) located in the main
intermediate cities. These centres provide BDS to players in the agricultural and other
sectors with the goal of promoting economic growth and generating employment.
A second category of economic corridors emerging in Latin America is the
commodity-extraction corridor. This corridor is mostly driven by private players
in an effort to increase the efficiency of strategic agricultural value chains, such as
soybeans and sugar-cane ethanol. It is most commonly found in the Southern Com-
mon Market (Mercosur) countries, particularly in Argentina and Brazil (Fergie and
Satz, 2007). Regrettably, these private-led corridors fail to make it to the list for in-
depth study in spite of their interest because they lack programmatic frameworks,
by their very own nature. Moreover, private efforts are rarely documented and are
less accessible than public or public-private initiatives.
3.4 ASIAN CORRIDORS AND THEIR POLICY BACKGROUND

Mapping of Asian corridors. Developing Asia has multiple and interesting experiences
in both regional and national economic corridors. Within the latter category, there
are urban corridors, economic corridors that try to develop the agricultural and other
sectors by improving the provision of BDS, and corridors that envisage the establish-
ment of complementary SDIs, for example industrial parks and SEZs. Table 8 provides
at-a-glance information about the Asian economic corridors identified.
Out of these corridors, only three have been selected. Two of them are regional
corridors: the ADB-supported GMS and the CAREC Corridor programmes. They
have been selected for being the earliest, most comprehensive and most advanced
corridor experiences in the region. Both programmes were designed to move
progressively from being transport corridors (physically linking the region) to mul-
timodal corridors (with the same features, but using various modes of transport);
TABLE 8
Economic corridors identified in Asia
Greater Mekong Subregion (GMS) programme Cambodia, China, Myanmar, Yes

Lao People’s Democratic Republic
1. North-South Economic Corridor (Lao PDR), Thailand and Viet Nam
2. East-West Economic Corridor
3. Southern Economic Corridor
Central Asia Regional Economic Cooperation Afghanistan, Azerbaijan, China Yes

(CAREC) Corridors (Xinjiang province), Kazakhstan,
the Kyrgyz Republic, Mongolia,
Pakistan, Tajikistan, Turkmenistan
and Uzbekistan
Mekong-India Economic Corridor India, Thailand, Cambodia, No

Myanmar and Viet Nam
Indonesian Economic Corridors Indonesia Yes

1. Sumatra Corridor
2. Java Corridor
3. Kalimantan Corridor
4. Sulawesi Corridor
5. Bali-Nusa Tenggara Corridor
6. Papua-Kepulauan Maluku Corridor
East Coast Economic Region Corridor Malaysia No
Micro Enterprise Development Initiative Corridors Armenia No
Azerbaijan Business Assistance Azerbaijan No

and Development Corridors
1. Guba Economic Corridor
2. Lenkoran Economic Corridor
3. Agstafa Economic Corridor
4. Zagatala Economic Corridor

thenceforth to logistics corridors, i.e. corridors that, besides providing physical

linkages, also harmonize the institutional framework of participating countries to
facilitate the efficient movement and storage of freight, people and related informa-
tion; and finally to economic corridors that are able to accelerate investments and
generate economic activities along the region, including the less developed areas
(Banomyong, 2008).
The third case is a national corridor initiative that took place in Indonesia. This
case has been chosen for being one of the most ambitious, for having a large agricul-
tural component and for embedding the promotion of industrial clusters and special
economic zones in larger-scale corridor spatial planning (CMEA, 2011).
Policy and institutional framework. In developing Asia, economic corridors are

primarily seen as key initiatives to promote regional integration, although some
corridor schemes have a national scope, i.e. they seek to develop specific areas
within a country.
ADB has been the pioneer and main supporter of subregional corridor
initiatives, such as the CAREC and GMS programmes that foster integration
in Central Asia, mainland Southeast Asia and southern China, respectively.
Institutions associated with the corridor programmes have developed regional
transport and trade facilitation strategies. In the case of the GMS corridor,
there is also a regional agricultural programme, as outlined in Table 9. These
subregional initiatives promoted by multilateral financing institutions and
subregional organizations are embedded in the overall framework of regional
intergovernmental agreements, such as those fostered by the United Nations
Economic and Social Commission for Asia and the Pacific (UN ESCAP)
concerning the trans-Asian networks of highways, railways and regional power
trade (De, 2013; Reilly, 2013).
TABLE 9
Policy and institutional framework informing the development of Asian corridors
Regional policy Asia
Regional The Asian Development Bank (ADB) has pushed the economic corridor
development bank model as the basis for the region’s integration strategy
Regional trade blocs Association of Southeast Asian Nations (ASEAN): AFTA and AEC
Eurasian Economic Community (EurAsEC)
South Asian Association for Regional Cooperation (SAARC)
Regional GMS subregion: Core Agriculture Support Programme (CASP, Phase II:
agricultural policy 2011–2015)
Regional Regional cooperative agreements: Intergovernmental Agreements on the

transport integration Asian highway and railway networks facilitated by UN ESCAP
The Central Asia Regional Economic Cooperation (CAREC) Transport and
Trade Facilitation Strategy (TTFS)
GMS transport strategy

The regional trade blocs, and in particular the Association of Southeast Asian
Nations (ASEAN),36 with its ASEAN Free Trade Area (AFTA) are increasingly
recognizing the importance of economic corridors. Such corridors are seen as a
stepping-stone towards establishing the ASEAN Economic Community (AEC)
by 2015 (Shrestha and Chongvilaivan, 2013). Moreover, the Economic Ministers of
ASEAN+637 endorsed the idea of an East Asia Industrial Corridor (EAIC) connect-
ing the Mekong Region to India, as the model project for the integration of East
Asia (ERIA, 2008).
Another important integration initiative in the GMS is the Ayeyawady-Chao
Phraya-Mekong Economic Cooperation Strategy (ACMECS) among the GMS
five. This political, economic, and cultural organization was set up by Thailand in
2003 to increase agricultural and manufacturing development, competitiveness and
employment creation in the subregion (Cochrane, 2012).
3.5 SUMMARY OF ECONOMIC CORRIDORS SELECTED

From the regional analysis performed, four models of economic corridors emerge.
Different drivers or institutions have spearheaded these models. They have deployed
a range of strategies, implemented various components, proposed different govern-
ance mechanisms and favoured one particular operational tool over another, creating
over time their own model. The lead conveners that have shaped various approaches
or models for supporting economic corridor development are the following:
ADB has supported corridors in Asia characterized by having the facilitation of
regional transport, trade and agricultural development at the core of their strategy.
The most prominent examples of ADB-led corridor are GMS and CAREC.
The PRA model supported the development of corridors in Peru, and was later
replicated in a multiciplity of developing and emerging countries. The PRA
model puts at its centre the establishment of centres that provide BDS.
The agricultural corridors in Mozambique and the United Republic of Tanzania
are affiliated to WEF’s New Vision for Agriculture. They use a model based on
multistakeholder partnerships to foster economic development.
Finally, other corridors are led by national governments that see in the corridor
approach an opportunity to spark growth in agriculture and other key economic
sectors in specific areas of their country. The important feature of this model is
that the national government is the leading agent promoting corridors, and not
a donor agency or international financing institution, among other possibilities.
Using this typology, Table 10 provides a bird’s eye view of the economic corridor
initiatives that have been selected for in-depth analysis in the coming chapters.
Finally, it is desirable to provide a reminder of why some corridors have been
eliminated in the course of this selection process. The corridors excluded belong to
one of the following categories.
36
ASEAN member countries are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Viet Nam.
37
ASEAN countries plus six countries, namely China, India, Japan, the Republic of Korea, Australia
and New Zealand.
TABLE 10
Summary of corridor profiles
Type Region Name Countries Key driver Year Estimated budget
involved of start
Asia GMS Cambodia, ADB, in collaboration with 1992 US$17.8 billion

The ADB model
Corridor Lao PDR, the European Investment (1992–2014) +

programme Myanmar, Bank (EIB), IFAD US$321 million
Thailand, (International Fund for in technical
Viet Nam Agricultural Development), assistance (TA)
and China the Nordic Development
(Yunan and Fund38 (NDF, climate
Guangxi) change investments), OPEC
Fund for International
Development (OFID39)
and the World Bank
Asia CAREC Afghanistan, ADB, the European Bank (1996) US$46 billion +
Corridor Azerbaijan, for Reconstruction and 2001 US$1 270 million
programme China (Xinjiang), Development (EBRD), in TA
Kazakhstan, the International Monetary
Kyrgyz Republic, Fund (IMF), Islamic
Mongolia, Development Bank
Pakistan, (IDB), the United Nations
Tajikistan, Development Programme
Turkmenistan (UNDP) and
and Uzbekistan the World Bank
LAC PRA Project Peru USAID, in collaboration 1998 Phase I (1998–2008)

The PRA
model
with two public and nine US$38 million

private partners and Phase II
(2009–2014)
US$23.9 million
Africa BAGCI Mozambique WEF’s New Vision January US$0.4 billion,

The corridor model of WEF’s
New Vision for Agriculture
for Agriculture 2010 of which US$20

million in a
Catalytic Fund40
Africa SAGCOT United Republic WEF’s New Vision May US$1.3 billion,
of Tanzania for Agriculture 2010 of which US$650
million (backbone
infrastructure) +
US$570 million
(last-mile
infrastructure41)
+ US$50 million
(Catalytic Fund)
Asia Indonesian Indonesia Government 2011 US$398 billion,

Nationally
led corridor
Corridors of Indonesia (GoI) of which 10%

funded by the
public sector +18%
by state enterprises
Source: www.gmsec.org; www.carecprogram.org; www.proyectopra.com; www.sagcot.com; www.beiracorridor.

com; and www.kp3ei.go.id [last accessed August 2013].
38
The NDF is the joint multilateral development finance institution of Denmark, Finland, Iceland, Norway
and Sweden. It has specialized in the provision of finance to climate change related investments since 2009.
39
OFID is the development finance institution established by the Member States of the Organization of the
Petroleum Exporting Countries (OPEC) in 1976 as a collective channel of aid to developing countries.
40
The Catalytic Fund provides start-up finance for agriculture businesses incorporating smallholder
farmers. The loans awarded by the Fund are either low-cost or interest-free, and repayable as soon
as the investee firm attracts private finance (SAGCOT, 2010).
41
See Glossary.
1. Transport or logistic corridors that have still not evolved into economic corridors.
2. Urban corridors have not been selected because of the relative irrelevance of
the agricultural sector in the corridor action plan.
3. Private sector-led corridors have been excluded owing to the absence of a
programmatic framework.
3.6 FRAMEWORK PROPOSED FOR THE ANALYSIS OF

ECONOMIC CORRIDORS
The corridor experiences shortlisted for further analysis will be examined using the
framework depicted in Figure 3. This framework contains two clusters of actions:
one leading to giving an effective strategic direction, and a second leading to an
effective implementation that can be easily scaled up.
The first cluster is formed by three building blocks needed to provide an effective
direction to the corridor initiative:
Leadership and alignment of the goals and visions of concerned stakeholders. This
element refers to the identification of the driver or drivers shaping the corridor,
and the description of the process to develop the corridor vision and engage
stakeholders around shared priorities.
figure 3
A framework for economic corridors
Delivery at scale
Delivery &
implementation
mechanisms
Strategy
 Soft interventions
& targeted
Effective direction sectors in the agricultural sector
Hard & soft  Cross-sectoral
interventions
soft interventions
 Hard interventions
Corridor
Leadership
development & aligment
matrix
Finance
& risk
management
Source: WEF, 2013 (adapted with permission).

Strategy deployed and targeting of sectors, industries and firms. The final goal is
to have a corridor roadmap agreed upon by all the key stakeholders.
Corridor development matrix. The roadmap is materialized in a matrix that lists
the corridor projects, classifying them according to their priority, the funding
source and their nature, e.g. investments and TA projects.
The second cluster groups three building blocks for delivering the corridor pro-
gramme to scale. These are the following:
Finance and risk management. The lead convener(s) should mobilize resources to
be able to implement the corridor programme. Resource mobilization obviously
comes before implementation, but for the sake of clarity the detailed budget
and sources of funding will be described after the scope of the soft and hard
interventions has been defined.
Although soft and hard corridor interventions are clustered together in Figure
3, in the next chapters they will be split into two sections. The first section
will deal with soft interventions in the agricultural sector and in cross-sectoral
links. Within this section, special attention will be given to the specialization
of the corridor in terms of agricultural value chains and market orientation.
The second part deals with infrastructure interventions and their interface with
agricultural commodities.
Delivery and implementation mechanisms, with a focus on the institutional
arrangements established among the corridor’s stakeholders.
To simplify, the framework in Figure 3 seems to follow a linear process. In reality,

the process is full of loops and feedback mechanisms, especially in terms of consult-
ing and bringing on board a broad range of stakeholders. Equally, the configuration
of the corridor matrix is not a one-time-only activity, but a cyclical process that
involves careful thought about the type of interventions that are needed in the
corridor. Likewise, the initial finance and risk management arrangements of the
agrocorridor need to be revised to incorporate new financiers and address any area
of poor performance and respond to new contingencies as they occur. And so forth.
Every step of the way will require adjustments and will inform the previous and
successive stages. Moreover, in each and every one of these stages, efforts should
be made to make an explicit articulation with the agricultural sector so that the
overall outcome of the economic corridor programme works for agriculture and
the environment.
39
Chapter 4
Introduction to the corridor cases
This chapter presents six corridor experiences that take place in developing regions:
one in Latin America, two in Africa and three in Asia. They are promoted by four
players that have left an indelible mark on the way the corridor programmes are
structured. These players are a regional bank (ADB), a bilateral government agency
(USAID), an international multistakeholder partnership (WEF’s New Vision for
Agriculture) and the Government of Indonesia (GoI). Each brings its own agenda,
background and distinctive modus operandi to the corridor programme it leads.
4.1 CORRIDOR CASES AT A GLANCE

Basic corridor facts and typology. These corridor initiatives are very diverse, in
terms of their timeline, catchment area and population (Table 11). Some pro-
grammes are multicountry, multicorridor and multisectoral, while others circum-
scribe themselves to one country, one corridor and one sector. They also have very
dissimilar budgets and targets for induced investments attributable to corridor
interventions, considered both in nominal and relative terms (with respect to the
corridor GDP).
These programmes are relatively homogeneous in terms of the components,
planning and implementation tools utilized; changes in governance mechanisms;
and greater involvement of other financiers from the international community and
TABLE 11
Summary of corridors analysed
Surface GDP
Year of No. of No. of Population Investments Targeted
(million (US$
gestation corridors countries (million) (US$ million) sectors
km2) billion)
BAGCI 2010 1 1 25 0.2 14.59 1 742 1
CAREC 1996 6 10 143 8.6 284.7 46 036 4
GMS 1992 3 6 326 2.6 863 8 163 9
MP3EI 2011 6 1 247 1.9 878 398 000 8
PRA 1998 15 1 197 0.5 29.99 681 –
SAGCOT 2010 1 1 48 0.3 25.2 3 370 1
Sources: www.adb.org; www.proyectopra.com; population of China’s provinces (year 2010):

http://www.stats.gov.cn/english/statisticaldata/censusdata/rkpc2010/indexch.htm [last accessed in August 2013].
Other population data (year 2010): UN Department of Economic and Social Affairs, Population Division (2013)
World Population Prospects. The 2012 Revision; AgDevCo and InfraCo, 2010; SAGCOT, 2011; CMEA, 2011;
CAREC’s surface: ADB database, key indicators for Asia and the Pacific; World Bank data.
the private sector. These commonalities and differences will be brought out and
explored during the course of this and following chapters.
A typology of economic corridors was presented towards the end of Chapter 3
(Figure 3), where corridors can be classified into different categories in relation to
the geopolitical unit involved, the nature of the corridor champion and the sectoral
focus adopted. In Table 12 this typology has been applied to the six corridor experi-
ences considered.
A brief glance at Table 12 reveals that most corridor programmes appraised have
a national focus, whereas two – those promoted by ADB – incorporate a regional
dimension. The specific countries participating in both mono and multicountry
corridors analysed are listed in Table 13.
Each programme supports a variable number of corridors that range from one to
ten, as shown in Table 14.
Two programmes are monosectoral, meaning that they tie together infrastructure
(transport, energy and telecommunications) and agricultural development. Accord-
ingly, they receive the name of “agricultural growth corridors”. The other four
TABLE 12
Types of corridors analysed
Geopolitical focus Sectoral focus Promoter
National Regional Bisectoral Multisectoral Donor/IFI Govern. PPP
BAGCI ¾ ¾ ¾
CAREC ¾ ¾ ¾
GMS ¾ ¾ ¾
MP3EI ¾ ¾ ¾
PRA ¾ ¾ ¾
SAGCOT ¾ ¾ ¾
TABLE 13
Countries involved in each initiative
Corridor initiative Countries involved
BAGCI Mozambique
CAREC Afghanistan, Azerbaijan, China (Xinjiang), Kazakhstan, the Kyrgyz

Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan
GMS Cambodia, Lao PDR, Myanmar, Thailand, Viet Nam and China
(Yunan and Guangxi Zhuang provinces)
MP3EI Indonesia
PRA Peru
SAGCOT United Republic of Tanzania
Sources: www.adb.org; www.proyectopra.com; AgDevCo and InfraCo, 2010; SAGCOT, 2011; CMEA, 2011.
Chapter 4 – Introduction to the corridor cases 41
TABLE 14
Number of corridors in each initiative
Corridor initiative Corridors supported
GMS North-South Economic Corridor, NSEC, which targets the ecologically and
culturally sensitive area linking southern China, Lao PDR, Myanmar and Thailand
East-West Economic Corridor (EWEC), encompassing Lao PDR, Myanmar, Thailand
and Viet Nam, which represents the only direct and continuous land route
between the Andaman Sea and the South China Sea
Southern Economic Corridor (SEC), which includes Cambodia, Thailand
and Viet Nam
CAREC Europe-East Asia Corridor

Mediterranean-East Asia Corridor
Russian Federation-Middle East and South Asia Corridor
Russian Federation-East Asia Corridor
East Asia-Middle East and South Asia Corridor
Europe-Middle East and South Asia Corridor
PRA Sierra La Libertad

Ancash
Sierra Norte de Lima – Huánuco
Pasco Junín
Huancavelica
Ayacucho – VRAE
Cusco
Arequipa
Puno
Madre de Dios
BAGCI Beira Corridor
SAGCOT Southern Corridor of the United Republic of Tanzania
MP3EI Sumatra
Java
Kalimantan
Sulawesi
Bali-Nusa Tenggara
Papua-Kepulauan Maluku
programmes focus on multiple sectors, either by design (e.g. GMS or MP3EI) or as

result of the natural selection carried out by market forces (the PRA Project).
These corridor initiatives have been promoted by various players, who have
moulded them according to their vision, existing instruments and available
resources. In Table 14, the category of “promoter” puts the main leader in the lime-
light, although the large majority of corridor programmes count on the support of
the international community, the national (and decentralized) government and the
private sector, in varying degrees.
Putting the corridors on the map. One of the most ambitious economic corridor
initiatives worldwide takes place in Asia, in the Greater Mekong Subregion. The
GMS corridor programme is the result of an economic cooperation and integration
agreement signed in 1992 by Cambodia, the Lao People’s Democratic Republic,
Myanmar, Thailand, Viet Nam (these five countries are thence referred to as GMS5)
and southern China (Yunan province and the Guangxi Zhuang Autonomous
Region), under the aegis of ADB.
As of December 2011, the programme had almost US$15 billion worth of
investment projects completed or under implementation.42 As seen earlier, the
figure 4
The three GMS corridors
North-South
Kunming
Guangxi
Yunnan
R
NMA
Nanning
MYA
Hanoi
Mandalay
LAO
PEOPLE’S
Naypyitaw DEM. REP.
East-West
Chiang Mai
Vientiane
Yangoon Khon Kaen
Southern
D
ILAN
THA
VIET
Bangkok CA
MB
(Krung Thep) OD
IA
NAM
Phnom Penh
Ho Chi
Minh City
National capital
Major city
Corridor
Source: author’s elaboration based on Ishida, 2012.
42
As at the end of 2011, 56 GMS priority projects worth around US$15 billion were either completed
or being implemented (ADB, 2012d).
programme comprises three corridors and nine subcorridors running across six
Southeast Asian nations (Figure 4).
Already in its third decade, the GMS initiative has become ADB’s flagship
exercise in regional economic cooperation, and has spawned a number of spin-offs,
with CAREC being the main one.
The CAREC programme, also supported by ADB, capitalizes on the success of
its predecessor. It is a partnership of ten countries (Afghanistan, Azerbaijan, the
Xinjiang province of China, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan,
Tajikistan, Turkmenistan and Uzbekistan) and six multilateral institutions – ADB,
the European Bank for Reconstruction and Development (EBRD), the International
Monetary Fund (IMF), the Islamic Development Bank (IDB), the United Nations
Development Programme (UNDP) and the World Bank – working together to
promote development through regional cooperation, leading to accelerated growth
and poverty reduction (CAREC, 2010; ADB, 2011f).
Spanning nearly 4 000 km across Central Asia, CAREC promotes six corridors
that extend inland along historic trade routes in Central Asia, linking western China
to the Caspian Sea. These corridors connect mostly landlocked members with each
other and to markets beyond by providing the finance and expertise to increase
mobility of people and goods across Central Asia, as seen in Figure 5.
figure 5
Corridors of the CAREC programme
CAREC 1a,c
CAREC 1b
CAREC 6b,c
KAZAKHSTAN
Qyzylorda
CAREC 3
Aqtau Shu
Almaty
Türkistan
Taraz Bishkek
Nukus
Uchquduq Shymkent
KYRGYZSTAN
Baky
CAREC 2 UZBEKISTAN Tashkent Chust
Türkmenbashi Osh CAREC 1,2,5
Balkanabat Jizzakh Khujand
TURKMENISTAN Bukhoro Nawoiy Bekabad Kashgar
Türkmenabat Samarqand
Qarshi
TAJIKISTAN
Ashgabat Dushanbe
Mary
Termez
National capital Kunduz
Serakhs Mazari
Major city Sharif
Corridor
Hirat
Kabul
Source: author’s elaboration (UN Map No. 3763 Rev. 7, December 2011, Department of Field Support - Cartographic Section).
Besides the valuable contribution of GMS and CAREC as individual pro-

grammes, it is interesting to analyse both initiatives back to back. They share origi-
nators, approach and the goal of linking landlocked countries and areas to attractive
regional and international markets. They also have in common that they have been
designed as regional programmes that support simultaneously several interrelated
corridors. Yet, at the same time, these programmes have adapted their components,
sectoral and market targeting, as well as their organizational structures to their
specific circumstances and needs.
The PRA Project supports several corridors that pursue economic development
within the subregions of Peru (Figure 6). The number of corridors supported by the
project has experienced some variations during the project’s lifetime, ranging from
ten to 13. In this subnational region context, economic corridors can be qualified
as natural commercial networks that link rural areas with intermediate cities that
exhibit high rates of poverty coupled with potential for economic growth. PRA cor-
ridors are geographically circumscribed to an administrative region or department43
and they are usually named after the principal intermediate city. By way of example,
the Tarapoto corridor covers the Region of San Martín and takes its name from the
city of Tarapoto, San Martín’s commercial (not administrative) capital.
The links between adjacent corridors lying along the same strategic transport
routes are also taken into account. In the previous example that would imply con-
sidering the linkages between the corridors of Piura, Jaén and Tarapoto, which are
all located along the IIRSA North highway.
The PRA Project employs a singular approach to infrastructure development
and collaboration with the private sector. The interest of the PRA case lies as
well in its evolution over a long period of time, during which new partners have
been added from the ranks of local governments and the private sector. Another
significant factor is the programme’s penchant for private sector participation and
solutions, which extends even to the Project’s institutional arrangements based on
outsourcing and PPPs.
USAID has spearheaded the programme’s creation and growth since its incep-
tion. The Project’s success has spawned several spin-offs all over the world, in which
USAID has applied the lessons learned from this pioneer initiative in Peru.
BAGCI was launched in January 2010 with the purpose of promoting com-
mercial agriculture44 in the Mozambican transport corridor of Beira. This corridor
is a bimodal network (roads and railways) established along one of the major
southern African transport routes. It links the port of Beira (Mozambique) to
several Mozambican provinces and parts of Malawi, Zambia and Zimbabwe. The
agrocorridor, although regional in scope, focuses mostly on the Mozambican
provinces of Manica, Sofala and Tete, which together cover an area of 22.7 million
ha. Figure 7 shows a graphic representation of the corridor. BAGCI took the form
of a long-term (2010–2030) PPP between the Government of Mozambique (GoM),
the private sector and the international community (AgDevCo and InfraCo, 2010).
43
Peru is divided into 25 regions or departments and one province.
44
See Glossary for a definition of subsistence, emergent and commercial farmers.
figure 6
Economic corridors currently supported by the PRA Project
Quito COLOMBIA
ECUADOR
Tumbes
Iquitos
PERU
Piura
Moyobamba
Chachapoyas
P
Chiclayo BRAZIL
Cajamarca
A
Trujillo Pucallpa
C
I
Huaraz Huánuco
F
Cerro
I
de Pasco
C
Huancayo
Major city Callao
Lima
National capital
Puerto
Sierra La Libertad Huancavelica Maldonado
Ayacucho
O
Ancash Cusco
Abancay
Sierra Norte Lima-Huánuco
C
Ica
Pasco Junín
E
BOLIVIA
Huancavelica A
Ayacucho-VRAE
N Puno
Cusco
Arequipa
La Paz
Arequipa
Puno Moquegua
Madre de Dios Tacna
CHILE
Source: author’s elaboration (UN Map No. 3838 Rev. 3, May 2004, Department of Peacekeeping Operations - Cartographic
Section).
The SAGCOT or Kilimo Kwanza corridor initiative was established as a PPP

in May 2010 to promote agricultural development in the Southern Corridor of the
United Republic of Tanzania. This (transport) corridor spans 930 km from Dar es
Salaam to the Democratic Republic of the Congo, Malawi and Zambia. It runs along
a backbone multimodal infrastructure, including roads, rail and power, anchored
by the Tanzanian port of Dar es Salaam. Within the country the corridor covers
approximately 28.7 million ha and is host to some nine million people. It passes
figure 7
The Beira Agricultural Growth Corridor
DEMOCRATIC
REPUBLIC
OF THE CONGO
UNITED
REPUBLIC
OF TANZANIA
I
MALAW
MOZAMBIQUE
Lilongwe
ZAMBIA
Lusaka Blantyre
Tete
Harare
Beira agricultural
Beira growth corridor
ZIMBABWE Rail and road link
Bulawayo
Road
National capital
Major city
BOTSWANA
Source: author’s elaboration (UN Map No. 4045 Rev. 7, November 2011, Department of Field Support - Cartographic Section).
SOUTH AFRICA
through an area with some of the richest farmland in Africa, running from the
Republic’s coastal plains and the valleys of Kilombero and Ruaha, to the hills and
valleys of the Southern Highlands and the Usangu flats (Figure 8). This area could
become the country’s breadbasket, and beyond, a globally significant agricultural
and livestock producer. Regionally, the corridor reaches mining industries in Zam-
bia and Malawi, as well as Katanga province in the DRC (SAGCOT, 2010).
Members of the SAGCOT partnership incorporate government, multina-
tional companies, the Tanzanian private sector, farmers and development partners.
It strives to attract investments into Tanzania’s Southern Corridor to tap on its agri-
cultural potential. As of today, this potential could be qualified as dormant, leaving
a large fraction of the rural population poor and food insecure. The corridor’s action
plan seeks to triple its agricultural output by bringing 350 000 ha into commercial
production – most of them under irrigation – by 2030 (ibid.).
In Indonesia, the MP3EI is an example of a government-led programme to
accelerate national growth using the corridor approach. This does not mean that
Indonesia’s is the “average” national corridor programme. First, the nation is a
major international player in terms of population and GDP and it is growing at such
figure 8
SAGCOT map
Dodoma
Kinonko
Morogoro Kibaha
Dar es Salaam
Mlandizi
Sumbawanga
Iringa
Mbeya
Makambako
Tunduma
UNITED
REPUBLIC
OF TANZANIA
ZAMBIA
MALAWI
MOZAMBIQUE
Road National capital Electric grid Agricultural growth

Railway Major city Port corridor (indicative)
Source: author’s elaboration (UN Map No. 4045 Rev. 7, November 2011, Department of Field Support - Cartographic Section).
high rates45 that by 2025 it may become one of the top ten global economic powers
(Kuncoro, 2013). Few emerging and developing countries have that many economic
and human resources to devote to this type of development initiative: Indonesia has
allocated nearly US$400 billion to its corridor programme.
Second, Indonesia is the largest archipelagic country in the world. This translates
into a programme in which each one of the six corridors selected cover one island,
with the additional challenge of improving inter-island connectivity.
Third, the geography of the country (17 000 islands stretching for 5 200 km
east to west and 1 870 km north to south) determines a high spatial concentration
in the western regions, e.g. the islands of Java and Sumatra where population and
economic activity (particularly manufacturing and services) tend to agglomerate,
45
As of 2012, Indonesia was the fourth most populous country in the world. The country’s real GDP
growth has been growing at an average of 6 percent, 2010–2013, year on year (Kuncoro, 2013).
figure 9
Indonesia economic corridors
Kalimantan EC
Sulawesi EC
Papua – Kepulauan
Maluku EC
Sumatra EC
Java EC
Bali – Nusa
Tenggara EC
Economic Center
Mega Economic Center
creating a wealth gap with the relatively less advanced eastern regions (ibid.). This
explains why the Indonesian corridor programme focuses not only on accelerating
growth but also on reducing regional inequality – and especially reducing disparities
in post-conflict areas.
In spite of these peculiarities, the case of Indonesia provides useful insights into a
national corridor programme driven by the government (both central and regional),
without any donor support but in partnership with the private sector (Figure 9).
4.2 TIMELINE OF THE CORRIDORS STUDIED

The varying approaches identified across the study are determined by the lead
convener of the corridor and the different regional and national socio-economic
contexts, but also by the length of time during which the corridor programmes
have been in operation. The first economic corridor initiative in Asia, the GMS
programme, started in 1992. In over two decades of existence, it has evolved from
a purely transport corridor to a development or economic corridor stage. The
pioneer economic corridor programme in Latin America dates back to late 1998,
whereas corridors in Africa are late bloomers. It is only natural that they are at
different stages of evolution. The timeline of the corridors analysed is presented
in Figure 10.
Figure 10 specifies the year in which the initiatives were officially launched.
However, most of the corridor programmes needed more time to take off properly.
For instance, the GMS economic corridor programme formally started in 1992,
but it was not until 1998 that its masterplan and first ADB loan were approved.
figure 10
Timeline of the selected corridor programmes
ADB-driven USAID-driven WEF-driven GoI-driven
1992 1996 1998 2010 2011
GMS corridor CAREC corridor PRA corridor BAGCI & Indonesian corridor
programme programme programme SAGCOT programme
Sister
projects
figure 11
Phases of the CAREC programme
Set-up of CAREC
Strategic
RETA initiatives institutional Comprehensive
Framework 2020
framework Action Plan
Phase I. Groundwork Phase II. Trust-building Phase III. Strategic Phase IV. Towards
and awareness raising direction and focus economic corridors
Source: author’s elaboration based on ADB, 2012e.
Similarly, the CAREC programme went through an inception phase from 1996 to
2001, and in 2002 its institutional framework was finally established (Figure 11).
In the same way, the official date of commencement of the PRA corridor
programme was 1998, but only in 2000 did it become fully operational with the
establishment of the first corridor centres, as shown in Figure 12.
Corridor programmes can evolve remarkably over time. New components can
be added or phased out. Corridors and subcorridors can be modified. New stake-
holders can get involved and governance mechanisms may change. A good example
of such fluid transition is illustrated in Box 6.
BOX 6
Evolution of the PRA corridors: a moving target
The PRA Project was put in motion in 1998 by USAID. The Project envisaged three compo-
nents: business development, infrastructure and policy dialogue – all of which started at differ-
ent times and with different implementers. The first component began with the establishment
of ESCs in the corridors during 1999 and 2000. Its implementation was initially the responsibil-
ity of the National Confederation of Private Business Institutions (CONFIEP) of Peru, but it was
later entrusted to an international consulting firm. The infrastructure PPP component came
into being into 2003 and was active until 2007. It was implemented in close collaboration
with the Ministries of Transport and Finance, and with ProInversión, the Peruvian investment
promotion agency in charge of implementing infrastructure concessions. The infrastructure
component facilitated the concession of the port of Callao and the IIRSA North highway, and
accomplished the transaction design phase46 for the IIRSA Central highway. Policy dialogue
only became a fully fledged component in the second phase (2009 to present).
The number of corridors supported by the Project have not remained stable over time. In
the first phase, it worked in 13 economic corridors in the Peruvian jungle and highlands: the
ten original corridors were established in 2000 and three other corridors were added later
on: Huancavelica (2002), Piura (2005) and Ancash (2007). In 2004, three ESCs (Cajamarca,
Puno and Huaylas) closed down.
The opening and closure of ESCs happened for reasons both internal and external to the
Project’s management. The internal reasons were a shift in strategic priorities of USAID/Peru’s
Mission,47 which resulted in changes in intervention areas in 2003; and resource limitations,
which compounded by the diversion of funds to the new and intensified corridors, provoked
the closure in 2004 of the three ESCs already mentioned. Such shifting budget priorities,
midway through the life of the Project, dictated that higher priority be given to:
alternative development zones (i.e. areas making the transition from coca to licit eco-
nomic activities), which translated into an intensification of activities in some segments of
the economic corridors of Ayacucho, Huánuco, Pucallpa and Tarapoto; and
border areas between Peru and Ecuador, namely, Jaén – one of the original PRA cor-
ridors – and Piura, where an ESC started up in 2005. These two corridors were financed
by USAID’s Peru-Ecuador Border Programme, and were associated with the Ecuador-Peru
Binational Commission.48
The external motivation derived from the interest expressed by private companies and public
agencies in the project model, and their subsequent decision to co-fund the opening of
new ESCs. The private sector made the first move. In 2002, a mining company located in
Huancavelica, Minas Buenaventura, decided to finance an ESC in that corridor – the first PPP
46
This encompasses the technical, financial and legal design of the concession transaction, which
typically includes prequalification and evaluation criteria, cost recovery and affordability.
47
http://peru.usaid.gov [last accessed August 2013].
48
http://www.planbinacional.org.pe [last accessed August 2013].
BOX 6 (Continued)
anywhere in the world under USAID’s then-new Global Development Alliance (GDA).49 In
2007, another mining company, Antamina, followed suit, investing in the establishment of
a new ESC in Ancash. In November 2008, the Clinton-Giustra Sustainable Growth Initiative
(CGSGI)50 signed a cooperation agreement with the Antamina Mining Fund to extend the
term of operation and scope of the ESC in Ancash.
From the public sector side, the Sierra Exportadora (SIEX) programme51 – in operation since
2006 to encourage exports from the Peruvian highlands – also became interested in the PRA
model. Peru and the United States of America had just signed a Free Trade Agreement (FTA),52
and the Peruvian Government saw in the PRA methodology and its good export record (US$54
million of additional exports to the United States of America in the first phase) an excellent
post-FTA initiative. Rather than attempting to replicate it on its own, SIEX decided to collabo-
rate formally with the Project and its private partners at the time (Minas Buenaventura and
Antamina) through a PPP agreement (the PRA Alliance) signed in March 2007 (USAID, 2008a).
PRA I ended in 2008, but USAID soon launched the second phase (September 2009),
convening public and private actors to join this effort. The successful alliances with Minas
Buenaventura, Antamina and CGSGI presented the private sector as a powerful ally in the
country strategy to combat poverty. For the second phase of the PRA, USAID renewed its
strategic alliance with PRA I partners, added six new private ones, expanded the partnership
with SIEX and built a new one with Lima’s regional government (ibid.).
The second and current phase (PRA II) has tried a new approach. Instead of preselecting eco-
nomic corridors, it has focused on engaging strategic partners (public sector agencies and local
private firms) to co-finance the operation of the ESCs. This strategy materialized in 2010 into a
partnership between USAID/Peru, the Government of Peru (GoP) through its SIEX programme,
the government of the Lima region and nine private sector organizations. PRA II operates
ESCs in ten trade corridors to connect SMEs to new markets, and identifies critical regulatory
reforms to ease trade and investment, and facilitates meaningful PPPs (USAID, 2008a; 2008b).
In January 2012, USAID/Lima and SIEX signed a Memorandum of Understanding (MOU)
to facilitate USAID’s transfer of the Peru PRA model into Peruvian hands as official economic
development policy. The signing of this MOU sought to merge further the capacities and
funding from the Governments of Peru and the United States of America, as well as private
sector companies to help the citizens of the highlands region overcome poverty.53
49
The Global Development Alliance (GDA) is a market-based business model for partnerships
between the public and private sectors to address jointly defined business and development
objectives. Alliances are co-designed, co-funded, and co-managed by partners so that the risks,
responsibilities and rewards of partnership are equally shared. Private actors include private
businesses, financial institutions, entrepreneurs, venture capitalists and investors; foundations
and philanthropists; and other for-profit and not-for-profit non-governmental entities. Further
information is available at: http://idea.usaid.gov/gp/about-gda-model [last accessed August 2013].
50
http://www.clintonfoundation.org/main/our-work/by-initiative/clinton-giustra-enterprise-
partnership/programs/peru.html [last accessed August 2013].
51
www.sierraexportadora.gob.pe [last accessed August 2013].
52
The Peru-United States Trade Promotion Agreement was signed in 2006 and entered into force in
February 2009.
53
www.chemonics.com [last accessed July 2014].
figure 12
PRA project timeline
2003. Start of 2010. Expansion

1999–2000. infrastructure 2008. of PRA Alliance 2014.
Opening of ESCs component End of PRA I to 12 signatories End of PRA II
1998. 2002. CONFIEP »» 2007. 2009. 2012.

Start of PRA I Chemonics PRA Alliance Start of PRA II MOU with GoP
1st PPP with and end of to transfer
private company infrastructure the PRA model
to fund ESC in component
new corridor
(Huancaelica)
The timeline indicated in Figure 10 also denotes the phenomenon of contagion

between corridor initiatives. Examples are multiple, as follows.
From GMS in the Mekong to CAREC in Central Asia: ADB initially promoted
the CAREC programme by presenting Central Asian Republics with the
GMS model of regional cooperation and transport/economic corridors. The
seed planted soon bore fruit, giving way to the CAREC regional cooperation
programme.
From Mozambique’s Beira Corridor to SAGCOT in the United Republic
of Tanzania – in turn, these eastern African corridors were influenced by the
North-South corridor initiative in southern Africa. The example of BAGCI and
SAGCOT is illustrated in Figure 13.
The Peruvian PRA Project has resulted in several spin-off corridor programmes.
This contagion also takes place at the national level. Box 6 illustrated the case of
Peru, where the GoP has institutionalized the PRA model of economic corridors.
Similarly, the Ministry of Agriculture of Mozambique (2010) sees the Beira Cor-
ridor as the pilot for several similar agricultural corridors that it is planning to
develop through its Centro de Promoção da Agricultura (CEPAGRI). The focus
on agricultural corridors offers Mozambique an opportunity to fast track the
development of its agricultural sector and to ensure food security, by building
on existing infrastructure networks and encouraging clusters of agricultural busi-
nesses to develop.
All the experiences analysed are, at least conceptually, in the “economic cor-
ridor” stage. However, many initiatives still devote most of their resources to
developing transportation infrastructure. For instance, as of 2012, 63 percent of
GMS programmed investments had gone to infrastructure development; in the case
of CAREC, this figure reaches nearly 80 percent of the overall budget. It is only
natural that in the process of evolving from transport to economic corridors, the
focus on infrastructure development still prevails for some time, to the detriment
figure 13
Timelines of BAGCI and SAGCOT
January 2009. January 2010.

Agrocorridor Launch of the BAGCI
proposal Partnership in Maputo
endorsed at WEF’s and Davos; presentation 2030.
New Vision of the Beira Investment End of
Meeting in Davos Blueprint the BAGCI PPP
[…] [...]
September 2008. 2009. July 2010.

Pilot agrocorridor Conduct of Launch of the
proposal submitted preliminary Beira Catalytic
during 63rd session studies for the Fund
of the UN General Mozambican
Assembly, New York agrocorridor
May 2010. May 2011.

Launch of the SAGCOT Set up of the
January 2009. Partnership at SAGCOT Centre Ltd 2030.
WEF meeting the African WEF and the SAGCOT End of the
in Davos in Dar es Salaam Catalytic Trust Fund SAGCOT PPP
[…]
October 2009. January 2011. August 2012.

Formation of a Presentation of SAGCOT
working group to the SAGCOT Investment
prepare a corridor Investment Greenprint
proposal Blueprint in Dar
es Salaam and
WEF in Davos
of the implementation of soft components. In fact, although the vision and politi-
cal will to become economic corridors are manifested in strategic documents and
masterplans, the corresponding budget allocations take time to follow. Moreover, a
nuanced treatment of these budgetary figures is needed, because soft interventions
require much lighter investments than hard or infrastructure ones.
In this evolutionary process towards economic or growth corridors, support to
agriculture is sometimes added years after the commencement of the initial corridor
operations. In 2006, the GMS corridor initiative started its agricultural flagship
programme, and the CAREC programme added agriculture as a second-tier area
of work, i.e. 14 and ten years, respectively, after their launch. In the case of GMS,
the programme enlargement to nine sectors was the result of an increased emphasis
figure 14
Timeline of the Greater Mekong Subregion programme
1992 Inception of the GMS Programme
1995 First Transport Master Plan
1998 First ADB loan for the transport sector approved

Broadening of scope from transport to economic corridor
2002 GMS Strategic Framework 2002–2012 adopted at the first GMS summit
2003 Cross-Border Transport Agreement
2004 First ADB Regional Cooperation and Strategy Programme 2004–2008
2005 Finalization of GMS Transport Strategy 2006–2015 »» the number of

planned economic corridors increased to nine and the scope was
broadened from road transport to multimodal transport (roads,
railways, ports and airports)
Endorsement of the Strategic Framework for Action on Trade
Facilitation and Investment (SFA-TFI)
2006 Inception of the Core Agriculture Support Programme (CASP) I (2006–2010)

Regional Cooperation and Strategy Programme Update 2007–2009
2007 Endorsement of CASP I (2006–2010) at the 1st GMS Agriculture Ministers’ Meeting
2008 Establishment of the Economic Corridor Forum

Vientiane Plan of Action
2010 Action Plan for Transport and Trade Facilitation
2011 Endorsement of CASP II (2011–2015) at the 16th GMS Agriculture Ministers’ Meeting
GMS Economic Cooperation Programme Strategic Framework 2012–2022
Source: author’s elaboration based on ADB, 2004; 2006; 2007a; 2010e; 2011a; 2011c; 2012a; and 2012b.
on trade facilitation and investment in different sectors, and the recognition of

agriculture as a central feature of the economy in the subregion (ADB, 2010a). For
ease of reference, Figure 14 shows the evolution of the GMS programme from its
inception to the present, with GMS interventions in agriculture highlighted. Con-
versely, BAGCI, MP3EI and SAGCOT have focused on agricultural growth from
their initial stages.
55
Chapter 5
Effective direction
This chapter is dedicated to analysing the cluster of actions aiming to steer the
economic corridor programme in the most effective direction, as noted in the study
framework illustrated in Figure 3. The cluster is composed of three building blocks,
namely the development of a shared goal and vision of the corridor programme;
the definition of the corridor strategy and targeting modalities; and the selection of
subprojects and instruments arranged in a development matrix.
5.1 CORRIDOR LEADERSHIP AND ALIGNMENT OF STAKEHOLDERS’

VISIONS AND GOALS
All the corridors studied have the common vision of accelerating agricultural
growth, coupled with infrastructural developments (e.g. reinforcing the transport
backbone). Inevitably, there will be variant nuances and subtleties in the way the
different corridor programmes envision achieving this growth, as expressed in Table
15. For example, the vision of the GMS and the CAREC programmes puts the
emphasis on regional economic cooperation.
The GMS has a vision of an integrated, harmonious and prosperous subregion
that meets the Millennium Development Goals. To attain this, the programme helps
TABLE 15
Visions and goals of the corridor programmes
Corridor initiative Visions and goals of the corridor programmes
BAGCI Stimulate investments (through multistakeholder partnerships) in commercial agriculture

and agribusiness within the Mozambican corridor of Beira, while improving the
productivity and incomes of smallholders
CAREC “Good neighbours, good partners and good prospects” through long-term, efficient
and effective regional economic cooperation in Central Asia
GMS Achieve an integrated, harmonious and prosperous GMS by improving connectivity,

competitiveness and community (“3 Cs”)
MP3EI Accelerate growth and reduce regional inequalities in Indonesia through joint
public-private investments in corridors, improved connectivity and better skilled
human resources
PRA Contribute to poverty reduction via sustainable job and revenue creation through
the mobilization of private-sector investment in selected economic corridors of Peru
SAGCOT Accelerate agricultural green growth in the Southern Corridor of Tanzania by attracting
strategic private sector partners with environmentally responsible business models
to enhance linkages with smallholders and fix critical links in the value chains
the participating countries to improve the so-called “3 Cs”: connectivity, competi-

tiveness and community. It thus enhances connectivity by investing in subregional
transport corridors, and power and telecommunications interconnection systems. It
boosts competitiveness through better connectivity, transport and trade facilitation,
the information superhighway network, tourism promotion and the expansion of
cross-border agricultural trade and investments. Finally, it fosters a greater sense of
community as it serves as a framework for GMS countries to address jointly shared
economic, social and environmental concerns.
The long-term vision of the CAREC regional cooperation programme is “good
neighbours, good partners and good prospects” (ADB, 2012e). CAREC’s goal is
to improve living standards and to reduce poverty in CAREC countries through
long-term, efficient and effective regional economic cooperation.
PRA’s vision is to contribute to poverty reduction via sustainable job and
revenue creation in corridor areas, with an entrepreneurial and demand-driven
approach. It seeks to generate income and employment through the mobilization
of private sector investment in selected economic corridors in Peru. In this process,
the Project recognizes, as mentioned earlier, the function of intermediate cities in
the corridor – linked to larger cities in the rest of the country – as hotspots where
the demand for agricultural and food products produced in the corridor originates.
The Beira and SAGCOT corridors have common visions and goals, which makes
sense, considering that they are both part of WEF’s “New Vision for Agriculture”.
Their vision is to transform agriculture, through partnerships, into a highly produc-
tive sector and an engine of economic growth, with major benefits for domestic
food supply, export earnings, smallholder farmers and local communities. The
goal of both corridors is to stimulate investments in commercial agriculture and
agribusiness within the corridors, while improving the productivity and incomes of
smallholders. These initiatives work towards attracting strategic private sector part-
ners with environmentally responsible business models to enhance linkages with
smallholders and to fix critical links in the value chains. By doing so, the corridor
partners expect to transform the corridor area into a major agricultural producing
and processing region and a key contributor to achieving food security.
The vision of the MP3EI is to create a self-sufficient, advanced, just and prosper-
ous Indonesia (Kuncoro, 2013). Its goal is to accelerate growth and reduce regional
inequalities through joint public-private investments in growth centres, improved
connectivity and better skilled human resources.
Having a clear vision is not enough. This vision needs to be shared by all the
corridor stakeholders. This is why one of the first steps in a corridor programme
is to forge a consensus vision and to align stakeholders around shared goals and
strategies. An example of such an alignment process is given in Box 7.
5.2 CORRIDOR STRATEGY AND TARGETING MODALITIES

Not all the corridor experiences considered follow the same planning and targeting
processes. Yet some common traits can be found. The formula for elaborating a
successful corridor strategy starts with the suitable selection of geographic areas,
i.e. those with adequate economic potential and capacity to develop and maintain
sustainably competitive advantage over time (Thomas, 2009). But then the road
forks in two directions.
Chapter 5 – Effective direction 57
BOX 7
Vision alignment among corridor stakeholders in the BAGC and SAGCOT
The idea of supporting the development of agrocorridors in Mozambique and the United
Republic of Tanzania has been the result of various parallel processes gathering steam across
the globe.
One such process started in 2008 at the General Assembly of the United Nations (UN)
in New York. During the event, a UN Private Sector Forum was held to join efforts to pro-
mote agricultural growth in developing and emerging countries. It was at the Forum that
the concept of an agricultural growth corridor was first discussed, following the proposal of
Yara – an international fertilizer company – to pilot an agricultural corridor programme. The
idea was well received by private sector leaders and representatives of development agencies,
including FAO, the International Finance Corporation (IFC) and the Alliance for a Green Revo-
lution in Africa (AGRA). Some Mozambican government representatives who attended the
presentation became interested in participating in the initiative (WEF, 2010). From there, a
process unfolded that would see the concept launched on the Mozambican side of the Beira
Corridor (BAGCI). Soon afterwards, the United Republic of Tanzania followed suit (SAGCOT).
The proposal to foster agricultural growth corridors was formally endorsed in the context of
WEF’s “New Vision for Agriculture” initiative, launched in Davos in January 2009. New Vision
found a perfect match in the vision of the Mozambican Government. Planning for and invest-
ments in the Beira Transport Corridor have been going on since the 1960s, although much of
the progress made vanished during the Mozambican civil war (1977–1992) (Meeuws, 2004). In
the 2000s, with the help of donors and the private sector, the corridor reached a point where
key infrastructure investments were again operational.54 Conditions then became right for the
GoM to move forward to an economic corridor approach. The strong interest of multinational
investors in the corridor was instrumental in building momentum (World Bank, 2010). Further
to embracing the corridor approach, the GoM developed an agricultural strategy (Plano Estra-
tégico para o Desenvolvimento do Sector Agrário, PEDSA) entirely in line with the New Vision,
and directly made or promoted major investments in irrigation and transportation infrastructure
(port and railway enhancements) along the Beira Corridor.
Mozambican-based private firms were also receptive to BAGCI. National corporations
were already making large investments in the mining and agriculture sectors (through com-
mercial farms and smallholder aggregation), and the port of Beira.55 These investments were
geared towards increasing the volume of goods transported, and catalysing agricultural out-
put in the corridor, as a result of an improved freight network and expanded cargo handling
capacity (AgDevCo and InfraCo, 2010).
54
Including rehabilitation work carried out with funds from a World Bank post-conflict project
to rebuild the Beira Transport Corridor in the 1990s. See: http://www.worldbank.org/projects/
P001770/beira-transport-corridor-project?lang=en [last accessed July 2013].
55
The port of Beira is the natural freight port for Zimbabwe, but can also play a significant role for Malawi,
Zambia, Botswana and the Congo.
BOX 7 (Continued)
The agrocorridor model was further concretized during 2009 through contributions from
international consulting firms such as Prorustica (specialized in supporting PPP development),
InfraCo (specialized in infrastructure services such as irrigation) and AgDevCo (agricultural
development).56 Ultimately, this shared vision translated into the establishment of BAGCI,
marked by an inaugural meeting on 20 January 2010 in Maputo. A few days later, BAGCI
was internationally launched and the Beira Investment Blueprint57 presented at the 2010
WEF Annual Meeting in Davos (Kaarhus et al., 2010).
In January 2009, the Minister of Agriculture of the United Republic of Tanzania attended
the WEF in Davos and expressed the interest of the country, together with Mozambique, in
taking a lead role in developing agricultural growth corridors (SAGCOT, 2010). In October of
that year, with efforts in Mozambique gathering steam, key players in Tanzanian agriculture
met to discuss the possibility of launching a pilot agricultural growth corridor in the country.
The meeting convened representatives of the Tanzanian Prime Minister’s Office (PMO), the
Tanzania Agriculture Partnership (TAP), the Tanzania Investment Centre (TIC), Yara, the Nor-
wegian Embassy, Norfund, the AfDB and the World Bank. Following the meeting, a working
group under TAP developed a concept note, exploring the establishment of an agricultural
corridor linking the fertile southern highlands to the port of Dar es Salaam, with support from
national and international stakeholders. The concept note of SAGCOT, as the corridor was
labelled, was presented and approved at the African WEF in Dar es Salaam in May 2010. The
initiative is personally driven by the Tanzanian President and counts on the support of G20
countries (DFID, 2012).
With the SAGCOT initiative formally launched, the first step was to prepare an Investment
Blueprint (presented in January 2011, exactly one year after the approval of that of BAGC),
which would identify public and private sector investment opportunities and propose an
investment promotion strategy for the corridor (SAGCOT, 2011). In 2012, SAGCOT launched
its Investment Greenprint,58 which lays out a strategy for implementing “Agriculture Green
Growth” in the corridor to intensify agriculture sustainably for both smallholder and com-
mercial agriculture, while conserving the natural resource base. In May 2011, the two main
institutions of the partnership – the SAGCOT Centre and the SAGCOT Catalytic Trust Fund
– were established.
56
InfraCo is a project development company founded in 2005 to provide infrastructure development
services. It is donor-funded (e.g. British, Netherlands and Swedish cooperation) but privately
managed (Kaarhus et al., 2010). AgDevCo is a not-for-profit company operating in sub-Saharan
Africa that invests “social venture capital” to create commercially viable agribusiness investment
opportunities. Source: www.agdevco.com [last accessed July 2013].
57
This type of blueprint is an investment roadmap for the corridor that comprises an indicative
long-term financing plan and a short-term project portfolio, with both “fast-track” and “ready to
go” investment opportunities (Kaarhus et al., 2010).
58
See Glossary.
BOX 7 (Continued)
As a result, the Beira and SAGCOT corridors have several common traits. They started
only months apart, driven by the same champions. They both have a focus on the selected
sector (agriculture) and geographic areas (growth poles and clusters), coupled with enabling
infrastructure improvements. Essentially, agribusiness and mining are the two sectors driving
growth and competing somewhat over the same resources and services (e.g. logistics). The
emphasis of both corridors on agriculture is hence not surprising, especially considering that
they have plenty of fertile arable land available, yet a low level of commercial agriculture.
In addition, these corridor initiatives have a similar organizational arrangement consisting of
multilateral partnerships that include the public and private sectors, development partners
and civil society. They also utilize the same tools to pilot innovative economic development
models: investment blueprints, Catalytic Funds59 and the implementation of agricultural sub-
projects grouped in selected agrobased clusters. Last but not least, they are both aligned with
their respective national agricultural strategies, PEDSA in Mozambique and Kilimo Kwanza or
“Agriculture First” in the United Republic of Tanzania.
One direction is to select sectors or industries. Two types of industries could

be targeted: those with strong current performance, which will yield near-term
economic benefits, but also those with high future potential to ensure, to the extent
possible, a healthy diversification of corridor activities in the medium and long
term. The subsequent step is to identify within the corridor area, growth centres or
nodes of high economic density where dynamic companies, their suppliers and their
customers are geographically concentrated, forming clusters with sustainable com-
petitive advantage, grounded both in current and potential economic performance.
Having completed the selection process of potentially strong industries and
identified their regional groupings, it is time to assess the status of the major con-
nective infrastructure linking clusters by roads, railroads and air connections and,
if needed, study the feasibility of completing, complementing or upgrading such
infrastructures. Afterwards, corridor developers might ask themselves about the
growth potential of adjacent areas and which other economic activities could be
promoted along the corridor. This option has been that favoured by all the corridor
programmes, except for the PRA.
The latter programme decided to go down the second road, i.e. selecting “star
connecting firms” according to certain criteria and a rule for ensuring the effective-
ness of the intervention, the 5:1 rule. This rule means that the project engages in a
TA intervention only when it is reasonable to expect a client’s sales to augment at
least five times the cost of the assistance in question (USAID, 2008a; 2008b).
The selection of star firms eventually reveals the competitive structure of the
corridor, which usually confirms the findings of prefeasibility studies carried out to
59
See Glossary.
assess the competitiveness of sectors or industries. This means that if these studies
were adequately conducted, there should not be much difference between the tar-
geting in the first (star sectors and industries) and second (star firms’) options. The
difference, as already explained, would be the possibility to discover out-of-the-box
business opportunities using the star firms’ model, which relies on the natural
selection of products/value chains/sectors, as opposed to an ex ante targeting. For
further information on the PRA strategy see Box 8.
Regardless of the path taken in the previous point, the subsequent step consists
of steering both public and private investment into the corridor areas targeted for
development. The key is to ensure that limited public resources are not distributed
so widely – something that might happen for political reasons, e.g. to reach a wider
base of citizens – that they fail to have the intended impacts. On the contrary, these
resources should rather be focused on helping the corridor to achieve its maximum
economic potential (Thomas, 2009). Finally, countries could move sequentially,
learning from successful corridors in one region or (sub)sector before spreading
investments to others.
Sectoral targeting. The corridor programmes studied have selected a variable num-
ber of sectors, as noted in Table 16. The exception was the PRA Project that decided
to support star connecting firms, as already mentioned, but ended up supporting
mostly agribusiness companies.
Table 16 shows that BAGCI and SAGCOT focus primarily on the agriculture
sector, coupled with infrastructure improvement. Agribusiness is also the primary
recipient of support from the PRA Project. The GMS cooperation programme
involves coordinated efforts in agriculture and eight other targeted sectors in order
to reduce business costs and facilitate the start-up and operation of business ventures.
TABLE 16
Sectors prioritized by the corridor programmes
BAGCI CAREC GMS MP3EI PRA SAGCOT
Agriculture ¾ ¾ ¾ ¾ ¾ ¾
Infrastructure ¾ ¾ ¾ ¾ ¾ ¾
Transport ¾ ¾ ¾ ¾ ¾ ¾
Energy ¾ ¾ ¾ ¾ ¾ ¾
Telecommunications ¾ ¾
Other sectors
Trade ¾ ¾
Environment ¾ ¾ ¾
Tourism ¾ ¾ ¾
Others ¾ ¾

Note: ¾ priority sector; ¾ second-tier area.
BOX 8
The development of a corridor strategy: the case of the PRA Project
The PRA Project is markedly business oriented but, paradoxically, its origin can be traced
back to Peru’s mid-1990s food security strategy. The Peruvian Government worked closely
with USAID between 1994 and 1997 to develop and implement a national food security
and anti-poverty strategy, with poverty being the main cause of food insecurity. The strategy
developers concluded that Peru’s rising poverty levels at the time called for a radically differ-
ent approach, and hence departed from conventional anti-poverty or food security strategies
in four ways (Riordan et al., 2003).
1. The point of departure was the explicit recognition of the link between intermedi-
ate cities, growth and poverty reduction (USAID, 2008a). The strategy developers
maintained that the solution to the problem (poverty) did not necessarily lie close to
the place where the problem was (rural areas). They believed that growth radiates
from intermediate cities or regional centres and extends to the economic corridors
between these centres, which in turn are linked to large cities or megacities (Lima).
Consequently, they recommended spatial prioritization to channel scant public
resources into selected economic corridors (linking intermediate cities) that were
stricken by poverty but that had economic potential (ibid.).
2. The second element was the perception that the Peruvian Government could not do
it all, and that market forces could significantly contribute to poverty reduction. From
this premise, the strategy traced out a number of directions for public policy to part-
ner with the private sector in order to take advantage of its ability to link poor people
with markets and create job opportunities (ibid.).
3. The third innovative feature was the combination of two types of interventions (social
and productive) that work in tandem, despite having different goals (equity versus
efficiency concerns), approaches and implementers. The social interventions envis-
aged required targeted investments in social infrastructure across the entire country,
using poverty maps and related tools. On the contrary, productive interventions were
to be exclusively carried out in selected economic corridors. This latter category includ-
ed both hard investments in supporting public infrastructure (roads, energy and ports)
and soft investments such as publicly financed (or donor-financed) but privately run
business promotion centres to reduce transaction costs in economic corridors (ibid.).
4. Finally, the strategy recommended considering an outsourcing model to provide busi-
ness services in the corridors and improve productive infrastructure, expanding the
use of concessions and competitive performance contracting (ibid.).
Such an unconventional, rather controversial approach was put in motion in 1998 by USAID
in the PRA Project. To achieve the objective of poverty reduction, the Project envisaged an
interrelated set of interventions concerning the provision of BDS, infrastructure development
and policy dialogue.
BOX 8 (Continued)
To implement the business development component, the first step was to establish both
functional and geographic limits. As per design, the PRA Project became organized geo-
graphically in economic corridors. All of Peru was mapped into 24 economic corridors that
were ranked according to two criteria: economic potential, and the prevalence of extreme
and moderate poverty. Given budgetary and design conditions, the project team decided to
work in the top ten ranked corridors, namely Ayacucho, Cajamarca, Cusco, Huancayo, Huá-
nuco, Huaylas, Jaén, Pucallpa, Puno and Tarapoto (USAID, 2008a; 2008b).
Within these corridors, the PRA Project favoured a transaction-focused approach based
on “star connector firms”. The Project intentionally runs counter to mainstream development
approaches that are based on “star products” or “star sectors” (i.e. product or sectoral/
industrial targeting). Therefore, within the corridors, the Project was open in principle to all
licit economic sectors and industries. However, an ex post analysis shows that it is primarily
an agricultural value-chain project.
Once the geographic scope had been delineated, it was time for functional targeting.
The decision fell on business and infrastructure development. The first function was to be
achieved through the provision of non-financial BDS (facilitating access to information, com-
mercial brokering and policy dialogue) to reduce market transaction costs. To provide these
services, the project established regional ESCs that assisted individual client firms to overcome
specific impediments to business expansion. Through these ESCs, the project linked buyers
with proven demand to local suppliers and lifted producer bottlenecks in meeting buyer
requests. By doing this, it generated rural income and employment.
The second function was based on the facilitation of public investment with the highest
economic return, such as roads and electricity. These investments were selected according
to their capacity to stimulate private sector economic activity, and consequently employment
generation. The infrastructure component, rather than directly funding and implementing
the development of such infrastructure, provided comprehensive TA to the GoP in order to
develop and implement a PPP model for innovative infrastructure concession in the corridors.
The above process determined a corridor strategy defined by the following elements:
the combination of business services offered by privately managed centres that provide
non-financial BDS to potential investors and existing enterprises in economic corridors,
and the provision of TA for developing high-impact infrastructure improvements (high-
ways and ports) through PPPs;
strict compliance with the Project’s “orders first” mantra – which encapsulates a practical
market-pull approach – that subsequently triggers its engagement in supply-push activities;
continuous performance monitoring that zeroes in on three indicators (additional sales,
employment and productive investments) with monetary incentives for staff linked to
the achievement of targeted sales and investment values (employment is calculated as a
function of additional sales);
adoption of an outsourcing model for the overall implementation contractor (USAID) and
the ESC operators (mostly NGOs, but also consulting companies and universities), thus
allowing a high degree of flexibility.
The priority sectors envisaged are agriculture, energy, environment, human resourc-
es development, investment, tourism, telecommunications, transport infrastructure
and transport and trade facilitation. Specific long-term plans have been developed
for most of the sectors, as will be explained in section 5.3. CAREC has four priority
sectors: transport, trade facilitation, trade policy and energy.60 From 2001 to 2012,
CAREC invested more than US$21 billion in almost 140 CAREC-related projects
in these core sectors (ADB, 2011f). The Indonesian corridor programme has
identified eight sectors as the focus of national development, inter alia, agriculture,
mining, energy, industrial, marine and telecommunications. Within these sectors,
the programme encourages large-scale investment in 22 primary activities, of which
seven belong to extended agriculture, namely food and beverages, palm oil, rubber,
cocoa, animal husbandry, timber and fisheries (Strategic Asia, 2012).
Whether by design or not, all of them support agribusiness development but
they do so in three different ways. The first is to have agriculture as priority or core
sector – either the “only one” (i.e. agriculture plus infrastructure) or one of many.
Examples of the former type of corridor are BAGCI and SAGCOT, given that
they target agriculture, together with the transport and energy sectors. Cases in
point of multisectoral corridors targeting agriculture are the GMS and Indonesian
corridors programme.
The second approach is that employed by the CAREC programme, in which
agriculture is a second-tier sector, as shown in Figure 15. Being a second-tier area
implies that corridor interventions in agriculture are the following:
Unlike first-tier initiatives, they are not sector wide. Rather, they are limited to
highly focused projects, which are smaller, less sensitive, but quick yielding and
conducive to building confidence and mutual trust among CAREC countries.
The focus on project implementation is accompanied by additional ADB support
to capacity development of national and regional institutions in defining regional
cooperation projects, mobilizing funds and catalysing stronger coordination
across CAREC ministries of agriculture. Agricultural interventions in this
scheme are principally designed to support efforts in core or first-tier areas and
notably (agricultural) trade facilitation.
These areas are subject to fund availability, principally from other support-
ers, as opposed to core areas of work that are funded by the champions of
the corridor programme. In fact, second-tier activities usually involve new
development partners.
These interventions are subject to different governance mechanisms from those
regulating core areas of work. For example, CAREC coordinating committees
required for priority sectors are not necessary for second-tier activities; instead,
the CAREC Secretariat should monitor and report on them. Furthermore,
the dominant mode of cooperation in agriculture has so far been building on
knowledge and information exchange through the CAREC Institute.61 This
60
http://www.carecprogram.org/index.php?page=carec2020-strategic-framework [last accessed July
2013]; investments as of December 2012. The accumulated estimated investment is expected to
amount to US$46 billion by 2014.
61
www.carecinstitute.org [last accessed July 2013].
institute is a virtual information hub that acts as a provider of training and of

Web-based information in core and second-tier sectors. The CAREC Institute is
in charge of conducting analytical work to determine how the core areas could be
enhanced by special initiatives in agriculture and, on this basis, provides guidance
to CAREC countries willing to initiate cooperative activities (special projects) in
the agricultural sector, according to a set of mutually agreed principles and criteria.
The third approach is a de facto targeting of the agribusiness sector, as in the PRA
corridors. The PRA Project favoured the principle of “star connector firms” instead
of targeting core or star prioritized sectors, value chains or products. However, this
selection process ended up by pointing at firms operating mainly in the agricultural
sector, as predicted by the initial feasibility studies that identified agriculture as one
of the sectors with greatest economic potential in the corridors.
When following the first approach, interventions to promote agricultural growth
within the boundaries of a corridor are planned comprehensively and bundle up
together to generate synergies and maximize impacts. The hallmark of an agrocor-
ridor – and, by the same token, of the agricultural component of an economic
corridor initiative – is the concentration and cross-linking of resources62 around
a long-term plan to promote sustainable growth throughout the corridor (Milder
et al. 2012; Kuroiwa, 2012). For example, the blueprint of the SAGCOT corridor
(SAGCOT, 2011) states that the objective of the corridor initiative is to “establish
southern Tanzania as a regional food exporter [...] by concentrating and linking agri-
cultural investment from the public sector, development partners, and Tanzanian
and international investors [...] (around) a targeted strategy and realistic action plan
to deploy resources, engage partners, and coordinate activities and investments”
(Milder et al., 2012; p. ii).
figure 15
First- and second-tier system of the CAREC programme
Energy Trade Agriculture Environmental

facilitation management
Transport Trade Control of Business

policy communicable development
diseases
CAREC’s priority sectors CAREC’s second-tier areas
CAREC Programme Strategy 2020
Source: author’s elaboration based on ADB, 2012e.
62
These resources should be enough to facilitate a critical mass in a physical and economic sense.
Pillars of the corridor programmes. The six corridor programmes have a varying
number of pillars, as shown in Table 17, but they all have three in common: infra-
structure development, investment promotion and business development.
Apart from these common elements, each corridor programme has a different
number of pillars and nuances in the way the pillars are approached. It is worth
examining the various programmes in detail (Box 9). The GMS programme, for
example, has five pillars concerning: (i) the strengthening of infrastructure linkages
through a multisectoral approach; (ii) facilitation of cross-border trade, investment
and tourism; (iii) enhancement of private sector participation and competitiveness;
(iv) development of human resources and required skill competencies; (v) protection
of the environment and promotion of the sustainable use of shared natural resources
(ADB, 2011a).
The CAREC programme has four pillars, as shown in Figure 16. The first pillar
refers to regional infrastructure networks, and notably the development of a seam-
less network of six transport corridors – the programme’s backbone – including
some 3 600 km of road building and improvements, almost 2 000 km of railway
track, the upgrading of ports and border crossings, and also better energy security,
efficiency and distribution (ADB, 2011f). The second pillar provides an integrated
framework for fostering trade, investment and business development, laying the
ground for subsequently building economic corridors. It would be the equivalent of
merging pillars two and three of the GMS programme. The third pillar is knowledge
transfer and capacity building to increase the capacity of member countries for
designing and implementing mutually beneficial regional initiatives, as well as to
form a cadre of officials skilled in regional cooperation processes. The fourth pillar
pertains to the provision of regional public goods to address transboundary issues,
TABLE 17
Sectors prioritized by the corridor programmes
Infrastructure linkages/connectivity ¾ ¾ ¾ ¾ ¾ ¾
Trade facilitation ¾ ¾
Investment promotion ¾ ¾ ¾ ¾ ¾ ¾
Business development/private sector

¾ ¾ ¾ ¾ ¾ ¾
competitiveness
Policy dialogue ¾ ¾ ¾
Development of human resources ¾ ¾
Environmental management ¾
Capacity building/organizational
¾ ¾
strengthening
Provision of regional public goods

¾
to address transboundary issues
Source: author’s elaboration, based on www.adb.org; www.proyectopra.com; AgDevCo & InfraCo, 2010;
SAGCOT, 2011; CMEA, 2011.
figure 16
Pillars of the CAREC programme
CAREC corridor programme
Improvement of regional Regional integrated Knowledge transfer Provision of regional

infrastructure networks framework for fostering and capacity building public goods to address
trade, investment and for implementing transboundary issues
business development regional initiatives
Source: author’s elaboration based on CAREC, 2010; and ADB, 2011f.
BOX 9
Rationale behind the design of the corridor programme pillars
The four pillars of the CAREC programme facilitate the transformation from transport
to economic corridors across the region. This transformation is measured under the
CAREC programme according to the evolution of “nodes” along the corridor. The
programme distinguishes three distinct phases consistent with the progress achieved
in and among the nodes.
The development of connective infrastructure among the nodes, i.e. transport cor-
ridors. The second pillar is instrumental in doing this.
The economic development of corridor nodes through soft and hard infrastructural
support. These nodes can be: (i) commercial nodes (i.e. where major business activ-
ity is carried out); (ii) border nodes, where cross-border movements of goods and
services occur; (iii) gateway nodes, where a corridor ends, and the entry and exit
points to the corridor are located; and (iv) interchange nodes, where two or more
corridors intersect.
The establishment of soft links among nodes. It is through the spatial interaction
among corridor nodes that new opportunities for trade and investment are cre-
ated, making the corridor function as an economic space. The third and fourth
pillars of the CAREC programme contribute to improving interaction among cor-
ridor nodes.
Source: CAREC, 2011.
such as environmental protection, natural resources management and the control of

transboundary animal diseases (CAREC, 2006).
The configuration of each pillar responds to a logic or rationale that is implicit
in the corridor strategy. The case of CAREC is given as an example. Box 9 explains
the rationale of the pillars that sustain the programme.
BAGCI has three pillars in addition to the implicit strengthening and expansion
of the Beira Transport Corridor, as depicted in Figure 17 (AgDevCo, 2012; BAGC,
2012). The first pillar deals with institutional strengthening and corridor governance.
figure 17
Components of the Beira Corridor programme
BEIRA corridor programme
Organizational Support to investors with inclusive business models Policy dialogue to

strengthening and in prioritized agricultural clusters improve agribusiness
corridor governance environment
Agricentre Catalytic Smallholder

Fund facility
Source: author’s elaboration based on AgDevCo, 2012; and BAGCP, 2012.
The second component supports agribusinesses with inclusive business models

to invest in prioritized clusters of high agricultural potential with good existing
backbone infrastructure. This component facilitates commercial opportunities for
national firms but also for sophisticated global companies that can catalyse the
upgrade of agricultural supply chains in the corridor. BAGCI foresees that this
combination of global investors (with their technological, financial and manage-
rial capabilities), together with the regional expertise of domestic players, will be
conducive to SME growth (AgDevCo and InfraCo, 2010; WEF, 2010). The business
opportunities identified in the corridor are a mix of “brownfield” and “greenfield”
investments.63 In this sense, BAGCI has understood the importance of supporting
fast-track brownfield developments and other quick-win agribusiness projects to
demonstrate success on the ground. The assumption is that once the wheels have
been put in motion, the existence of a critical mass of businesses, coupled with
focused planning and rapid implementation in these locations, will attract other
agribusiness investors.
The third component encompasses promoting policy dialogue and improving the
business environment. The latter point requires the removal of specific business con-
straints that prevent the development of the selected agrobased clusters, including
the rather suboptimal provision of public services such as agricultural extension.64
BAGCI’s strategy to improve the agribusiness climate involves partnering with
other stakeholders to address policy constraints, such as the accessibility of land to
investors and the fruit fly problem65 affecting investments in the corridor (BAGC,
2012). BAGCI has also supported the GoM in the revision of the seed and fertilizer
regulations approved in 2012 (DFID, 2013).
SAGCOT envisages two pillars: (i) support the development of agricultural
clusters in the corridor; and (ii) policy dialogue to ensure an enabling environment
for the agribusiness sector. The first pillar resembles the corresponding pillar of
BAGCI. The pillar on policy dialogue reflects the priorities of the Government of
63
See Glossary.
64
See Glossary.
65
BAGC has a partnership with the Provincial Directorate of Agriculture in Manica of the
Mozambican Ministry of Agriculture to support monitoring the incidence of fruit fly.
the United Republic of Tanzania (GoT). Special task forces have been established
to address specific investor issues regarding land leasing (through regional land
banks), export regulations, taxation and imports of seeds, other inputs and agri-
cultural machinery. Private sector participation in this dialogue is ensured by the
SAGCOT Centre, which coordinates with the Tanzania Private Sector Foundation,
the Agricultural Council of Tanzania and other private sector organizations that
bring together local and international investors to guarantee that priority issues for
the corridor are addressed at the highest levels.
MP3EI unfolds a development strategy with three interrelated pillars. The first
pillar regards the development of existing and new growth centres along economic
corridors through the promotion of clusters and SEZs, conforming to the core
competencies of each region. This component seeks to optimize agglomeration
advantages, explore regional strengths and reduce the spatial imbalance of economic
development throughout the country. The GoI provides incentives to SEZ firms,
such as favourable taxation and customs policies, labour regulations and licensing
developed in consultation with the private sector. The second pillar refers to the
improvement of connectivity between the centres of economic growth (major cities)
and main clusters supported by improved infrastructures including roads, seaports,
airports, power, water and other related infrastructures. Connectivity is understood
in a triple sense: intracorridor (or intra-island) connectivity, inter-economic-cor-
ridor connectivity and international trade logistics or global connectivity, notably
with other ASEAN countries. The last pillar points at the investment in human
resources – through training, research and development (R&D) and technology
transfer – to strengthen the capacities required to support the development of cor-
ridor initiatives (CMEA, 2011).
5.3 PROCESSES AND TOOLS FOR PLANNING AND LAUNCHING

CORRIDOR PROGRAMMES
Each corridor intervention analysed has as its starting-point the elaboration of
a masterplan or blueprint that shows the development path for the corridor and
establishes the contributions and responsabilities of each stakeholder involved.
The ultimate goal of the agribusiness components contained in the masterplan or
strategic framework (SF) is to promote agriculture-driven economic growth along
the corridor (SAGCOT, 2011; Milder et al., 2012). In the case of the WEF-led cor-
ridors, detailed blueprints assessing the feasibility of the agricultural corridors and
modelling the development of agricultural activities were prepared. The approval
of the SAGCOT and BAGCI blueprints marked the beginning of corridor activi-
ties. SAGCOT also prepared a greenprint to promote green growth and minimize
potential negative environmental impacts. Likewise, Indonesia laid its corridor
strategy in its masterplan (MP3EI).
ADB-led corridors have long-term SF documents as reference points to guide
their interventions. For example, the GMS programme has ten-year plans, i.e. the
GMS Strategic Frameworks 2002–2012 and 2012–2022 (the latter document is
described in Box 10). For further information, see documents in the bibliography
(ADB, 2011a; 2012e). Such frameworks function as roadmaps that provide the
stakeholders with the general layout of the programme strategy and with a multi-
year implementation plan. They are also pivotal to present a “business plan” for the
BOX 10
The GMS Strategic Framework 2012–2022
The GMS Strategic Framework 2012–2022 strives to adopt fully the regional economic corri-
dor approach, which implies promoting “multisector investments to foster economic corridor
development, stronger cross-sectoral linkages, more local stakeholder involvement [...]”, as
well as more effective monitoring and evaluation (ADB and ADBI, 2013; p. 58).
The framework proposes widening and deepening the GMS corridors in three ways.
Adding “area development plans” through a variety of measures, namely: promoting
agribusiness investments; developing market and storage infrastructure; providing incen-
tives to industrial development; enhancing business climate and capacities for SMEs;
increasing rural-urban linkages by developing “green” value chains; enhancing resilience
of investments by using climate friendly technologies; and investing in tourism infrastruc-
ture. The emphasis of these measures is on facilitating environmentally and socially sound
trade and investment initiatives in the newly connected areas, as a means to generate
income, employment and more intraregional trade.
Finalizing incomplete infrastructural linkages and funding multimodal transport initiatives
with regional impact (railways, water and air transportation). Extending the network of
feeder roads linked to the main road arteries is also contemplated.
Enhancing regional transport and trade facilitation to reduce national barriers. This
includes the development and strengthening of logistics companies and the standardiza-
tion of custom procedures in the corridors. This strategy recognizes the critical role that
the private sector, and particularly logistics firms, can have in reducing costs and increas-
ing the flow of intermodal exchange of goods and services across the corridors (ADB,
2010e; 2011a; 2011c; 2012a; 2012b).
To underpin such economic corridor development, the new SF introduces two innovative
elements. The first element is a second-generation project pipeline with increased TA to
implement the action plan in agriculture and other targeted sectors. The second element is
a revamped approach on coordination and capacity development, based on the understand-
ing that a “business as usual” path is not an option for going forward. The new generation
of corridor development undertakings foreseen in the SF includes complex and integrated
multisector initiatives that encompass both hard and soft aspects. Such interventions entail
greater need for knowledge generation and management, institutional adaptation and, more
specifically, a stronger engagement with local authorities and private firms in the corridor
areas (ADB, 2010e).
corridor(s) that can be utilized to persuade other actors to co-finance specific areas
of work or activities detailed in the plan.
The SFs of both GMS and CAREC are operationalized through medium-term
action plans. They have also developed specific long-term plans for each flagship
programme or priority sector, which are well aligned with the overall framework
contained in the medium- and long-term plans. For instance, the GMS programme
has five-year plans for the agricultural sector, i.e. CASP I and II, and strategies for
other prioritized sectors, as noted in Table 18.
According to Sanghvi, Simons and Uchoa (2011), governments of developing
countries should make their corridor-based plans to foster agricultural growth as
targeted and explicit as possible. PRA designers disagree with this premise, hence
their attitude to the planning instrument described is slightly different. The PRA
Project has a project document that maps out the strategy, sets targets (results
framework) and indicates the components available, but keeps a flexible approach
on how to deliver targets. An essential ingredient of such flexibility is the absence
of selected sectors, industries and beneficiaries.
The blueprints or masterplans usually include a results framework and develop-
ment matrix for planning corridor subprojects. The matrix contains a list of priority
investments and TA corridor projects. The main purpose of the matrix is to serve as
a basis for corridor planning, programming and monitoring (Table 19). In addition,
it is of use for mapping the different funding sources, classifying the subprojects
into the various supported sectors, and differentiating which projects are funded
through loans, grants and/or TA funds. This matrix underlines the existing areas of
work with funding gaps and can be used as a platform for donor cooperation, i.e.
for negotiating with potential financiers and donors.
The preparation of the masterplan can be carried out in a participatory man-
ner through corridor working groups and stakeholder meetings. Opening up the
TABLE 18
Sectors targeted by the GMS cooperation programme and their corresponding plans
Targeted sector Support strategy or programme Flagship project(s)
1. Agriculture Core Agriculture Support Programme Flood control and water resource
(CASP) management
2. Energy GMS Energy Roadmap Regional power interconnection

and trading arrangements
3. Environment Core Environment Programme and Strategic environment framework

Biodiversity Conservation Corridors
Initiative (CEP-BCI)
4. Human resources Phnom Penh Plan for Development Development of human resources
development Management (of human resources) and skill competencies
5. Investment Strategic Framework for Action on Enhancement of private sector

Trade Facilitation and Investment participation and competitiveness
(SFA-TFI)
6. Telecommunications Telecommunications backbone
7. Tourism GMS tourism sector strategy GMS tourism development
8. Trade Action Plan for Transport Facilitation of cross-border trade

and Trade Facilitation and investment
9. Transport Cross-Border Transport Agreement North-South Economic Corridor (NSEC)

(CBTA) East-West Economic Corridor (EWEC)
Southern Economic Corridor (SEC)
Source: www.adb.org [last accessed July 2013].

TABLE 19
Chapter 5 – Effective direction

Various types of plans for economic corridor development
GMS CAREC PRA BAGCI SAGCOT Indonesia
Long-term plan Ten-year Strategic Frameworks, Initial framework: Project Investment Investment Blueprint MP3EI
e.g. SF 2002–2012 and SF SF for a Comprehensive document Blueprint and Greenprint
2012–2022 Action Plan (2006) with results
and SF 2012–2022 framework
Medium-term Five-year plans, e.g. Vientiane Three-year operations

plan Plan of Action for GMS plans, e.g. CAREC
Development (2008–2012) Member Countries
and three-year business plans, Regional Cooperation
e.g. GMS Strategy and
Programme (2005–2007)
Regional Cooperation
Operations Business Plan
(2011–2013)
Sector action Five-year plans, e.g. agricultural Five-year plans, e.g.

plans sector plans: CASP I (2006–2010) Transport and Trade
and CASP II (2011–2015) Facilitation Strategy
and Action Plan
(2011–2015)
Specific corridor Five-year corridor plan, e.g.

plans Strategy and Action Plan for SEC
Monitoring and Monitoring of overall corridor CAREC Development PRA M&E M&E The SAGCOT A full-time
evaluation (M&E) development and sectoral plans, Effectiveness Review system framework Secretariat monitors dedicated
system e.g. M&E of the progress made outsourced to and processes daily activities, but Secretariat is
in implementation of the CEP- a private firm for assessing has outsourced the responsible for
BCI 2012–2016 the impact of design and operation developing an
investments in of an M&E system to M&E system
the corridor assess the impacts of for MP3EI
the partnership
71
design and preparation process to the national and international community is

indispensable in order to maximize the engagement of key stakeholders. Corridors
take different pathways to engage partners. Mozambique and the United Republic
of Tanzania have invested substantial time in building trust among stakeholders and
defining shared goals and principles before launching pilot projects. This is a “fun-
damentals first” approach. It takes time but it helps build a strong foundation for
sustained collaboration, without which success can never last. In the CAREC and
PRA Projects the focus is on initiating action-oriented commitments first, using this
process as an avenue for building collaboration. The strength of this “action first”
approach is to kick start commitments and activities; however, once initial action is
under way, the risks of “learning by doing” can weigh down performance and the
lack of a common platform can slow resource mobilization and the engagement of
additional stakeholders.
Ultimately, it is important to understand that this is an open-ended process. The
corridor programmes analysed have established baselines according to their results
frameworks and put in place M&E systems to assess the progress made against the
baselines, and modify or redesign the strategy and action plan as appropriate. In
some cases, the monitoring of daily activities falls under the mandate of the corridor
secretariat or executive body, while the target and impact assessment is frequently
outsourced to ensure neutrality and the application of the right type of expertise.
Some M&E systems have a smarter design – with simple but clear targets and
a stronger degree of consistency and internal coherence – and are more carefully
implemented than others. In the former case, it is easier to measure results and
effectiveness, as in the case of the PRA Project. Thanks to its M&E, plus ad hoc
impact analysis studies, it can show the impact of corridor development on clients
and beneficiaries (effectiveness measures) and institutions (demonstration effect).
For instance, the PRA Project introduced a cost-effectiveness rule for each
intervention that required close monitoring but produced excellent results: every
dollar spent in the BDS component resulted in US$7.26 in new client sales. This
achievement was due in part to the 5:1 rule applied to TA. The final evaluation of
PRA I comprised a product-by-product analysis of the ratio between new sales and
related direct TA expenditures66 throughout PRA I’s life span. It was found that the
ratio for the total portfolio was 75:1. However, within this aggregate ratio there was
broad variation. Processed products were among the most cost-effective products,
with primary products frequently being the least cost-effective ones (USAID,
2008a). Likewise, for the infrastructure PPP component, every dollar invested
leveraged US$87 in private capital investments plus commitments to operate and
maintain the infrastructure over the next 30 years in excess of US$103 (ibid.).
When the corridor programme is closely monitored, it is possible to detect the
need to redesign some elements to address any gaps identified and/or adapt to
evolving situations. For instance, the geographic boundaries of the corridors may
undergo some changes during programme implementation, as happened with the
66
The analysis excluded the fixed costs of the ESCs or the Lima office and the indirect costs of the
implementation contractor (USAID, 2008a).
subdivision of the three GMS corridors into nine subcorridors, and the possible
extension to India. Again, in the PRA Project, the number of corridors varied
repeatedly as a result of various internal and external dynamics. Furthermore, new
components can be added (e.g. the addition of agriculture development and other
areas of work in the GMS and CAREC programmes), and governance mechanisms
can be introduced or enhanced when the institutions concerned are ripe and ready
for greater involvement.
The M&E system of the PRA Project detected some vulnerability in the first
phase, and so PRA II made a conscious effort to fix this by mainstreaming gender
equity, compliance with labour standards, environmental protection, biodiversity
preservation and the inclusion of vulnerable groups in ESC activities. This main-
streaming effort has encompassed the redesign of business plan formats and the
M&E system to incorporate these dimensions, as well as the provision of training
and mentoring to comply with good agricultural and livestock practices, the Pes-
ticide Evaluation Report and Safe Use Action Plan (PERSUAP), and labour and
environmental standards (USAID, 2010).
75
Chapter 6
Delivery at scale: budget and
modalities of interventions
This chapter discusses two of the building blocks that form the “delivery at scale”
triangle represented in Figure 3. The third building block deals with corridor gov-
ernance, which will be examined in Chapter 7.
6.1 BUDGET AND SOURCES OF FUNDING

Table 20 details the investments made by corridor supporters and those investments
induced by the corridor programmes. The figures recorded refer to actual and/or
estimated investments depending on each case. For the CAREC, GMS and PRA
corridor initiatives, the figures include actual investments obtained until 2011, plus
estimated investments for the current period (2012–2014). In the remaining cases,
estimated figures have been used according to the corridor masterplan or blueprint.
The table shows a broad range in the estimation of direct and induced invest-
ment in the corridor programmes, with MP3EI being by far the most ambitious
initiative among those analysed. The table disaggregates investments by funding
source, differentiating between the main conveners or supporters, other supporters,
TABLE 20
Budget and sources of funding of the corridor experiences studied
Induced public
Induced PPPs
Co-financing
US$ million
investment
investment
convener
Induced
private
Main
Total
%
%
%
BAGCI 386 22 1 356 78 – – – 1 742
CAREC 25 136 55 – 12 196 26 8 704 19 – 46 036
GMS 7 428 41 – 4 830 27 5 904 33 – 18 163

1)
Indonesia 111 440 28 202 980 51 – – 83 580 21 398 000
PRA 62 9 28 4 3 – 4 1 584 56 681
SAGCOT 1 270 38 2 100 62 – – – 3 370
Sources: author’s elaboration, based on www.adb.org; www.proyectopra.com; AgDevCo and InfraCo, 2010;
Note1) The GoI is the main convener of the Indonesian corridors, so the induced public investment is considered
null to avoid duplication.
national governments and the private sector. For example, in the CAREC, GMS and
Indonesian cases, the corridor countries contribute to the programme with over a
quarter of the total budget, i.e. 26, 27 and 28 percent, respectively.
In all the cases, the contribution of the private sector to the development of the
corridor – registered either as induced PPPs or induced private investment – is note-
worthy. The exceptions are the corridors following the ADB model, but basically
because these data are not available.
Table 21 tries to put things into perspective and allow cross-comparison by
detailing the estimated accumulated investments per corridor and per country.
Another piece of data worth highlighting is the percentage of the corridor’s
budget that goes into the agricultural sector (Table 22). This ratio range is extremely
variable since it depends on the number of economic sectors and industries targeted,
but also on the fraction of the budget dedicated to the development of backbone
infrastructure, which can be very high. For instance, in the GMS corridor pro-
TABLE 21
Estimated accumulated investments per corridor and per country
Number of Accumulated investments Accumulated investments
corridors per corridor (US$ million) per country (US$ million)
BAGCI 1 1 742 1 742
CAREC 6 7 673 4 604
GMS 3 6 054 3 027
Indonesia 6 66 333 398 000
PRA 10–15 54 681
SAGCOT 1 3 370 3 370
Sources: author’s elaboration, based on www.adb.org; www.proyectopra.com; AgDevCo and InfraCo,

2010; SAGCOT, 2011; CMEA, 2011.
TABLE 22
Percentage of corridor budget dedicated to agriculture
Corridor budget allocated to the agricultural sector (%)1)
BAGCI 35.0
CAREC n.a.
GMS 5.0
Indonesia 7.7
PRA 80.0
SAGCOT 49.0

2010; SAGCOT, 2011; CMEA, 2011.
1)
These figures have been calculated taking into account exclusively the direct budget of the corridor
programme (not the induced investments). In the cases of BAGCI and SAGCOT, investments in last-mile
infrastructure are included in the calculation, but investments in backbone infrastructure are not.
Chapter 6 – Delivery at scale: budget and modalities of interventions 77
gramme, agriculture is one of nine prioritized sectors, receiving 5 percent of the

budget – somewhat negligible if compared with over 60 percent of the total budget
allocated to connective infrastructure.
The final piece of information examined is the estimated contribution of the cor-
ridor programme to the corridor GDP. On average, this contribution is 1 percent, or
0.6 percent if the distortion introduced by the Indonesian case – as it much diverges
from the mean – is eliminated. This gives an idea of how important these corridor
programmes can be for the local economy of the corridor, and arguably for the
concerned countries and regions.
The funding detailed in Table 23 includes both loans and grants for investments,
and grants for TA. TA may be at national and regional levels (regional TA or RETA),
depending on each case. For example, in the case of the GMS programme, so far less
than 2 percent of the total budget corresponds to RETA projects (see Table 24 for
further details). As of December 2011, the programme had implemented or was in
TABLE 23
Contribution of corridor investments to the corridor GDP
1)
US$ million Contribution of corridor direct and induced investments to annual GDP (%)
BAGCI 0.8
CAREC 1.1
GMS 0.12
Indonesia 3.0
PRA 0.16
SAGCOT 0.9

2010; SAGCOT, 2011; CMEA, 2011.
1)
The ratio has been calculated by dividing the annualized corridor investments, direct and induced,
actual or estimated depending on the case, between the current annual GDP of the corridor.
TABLE 24
Estimated investments in GMS corridors
ADB Governments Co-financing Total
US$ million
Loans 1992–2011 5 103 4 312 5 592 15 007
TA 1992–2011 105 20 161 286
Subtotal 1992–2011 5 208 4 332 5 754 15 293
Loans 2012–2014 2 214 499 123 2 835
TA 2012–2014 7 – 28 35
Subtotal 2012–2014 2 221 499 151 2 870
Total 7 428 4 830 5 904 18 163
Source: www.adb.org [last accessed July 2013].

TABLE 25
Regional technical assistance projects financed by ADB under GMS CASP I and II and related fields
Project
Title Amount (US$)
number
CASP I
Promoting Partnerships to Accelerate Agriculture Development and

6110 300 000
Poverty Reduction in the Greater Mekong Subregion
Strengthening Capacity and Regional Cooperation in Advanced

6214 1 000 000
Agricultural Science and Technology
Expansion of Subregional Cooperation in Agriculture in the Greater

6324 1 200 000
Mekong Subregion
9036 Improving farmers’ livelihood through post-harvest technology 750 000
9047 Improving farmers’ livelihood through rice information technology 1 000 000
Subtotal 4 250 000
CASP II
Transboundary Animal Disease Control for Poverty Reduction in the

6390 1 650 000
Greater Mekong Subregion
Twelfth Agriculture and Natural Resources Research at International

6439 2 800 000
Agricultural Research Centres
Enhancing Transport and Trade Facilitation in the GMS (includes mapping

6450 1 750 000
of global value chains in the corridors)
6521 Accelerating implementation of CASP 1 500 000
Support for the Association of Southeast Asian Nations Plus Three

7495 2 000 000
Integrated Food Security Framework
Strengthening Local Chambers of Commerce and Industry along the East-

7521 600 000
West Economic Corridor to Promote Trade, Investment and Value Chains
Capacity Building for the Efficient Utilization of Biomass for Bioenergy

7833 4 000 000
and Food Security in the GMS
Subtotal 14 300 000
Total 18 550 000
Source: www.adb.org [last accessed August 2013].
the process of implementing 456 investment projects, with a total project cost of
US$15 billion,67 mostly in the form of loans, but also with a certain grant compo-
nent. These projects dealt with the improvement of infrastructure (e.g. subregional
roads, airports, railways, hydropower for cross-border power supply, and tourism
infrastructure) as well as investments in agriculture. In addition, ADB and other co-
financiers supported nearly 180 RETA projects with a total cost of US$286 million
(subtotal 1992–2011) for economic and sector work, project preparation, capacity
67
www.adb.org [last accessed August 2013].
development, and coordination and secretariat assistance (ADB, 2012c). For the
current planning period (2012–2014), total estimated investments amount to US$2.8
billion in loans and grants, in addition to US$35 million of RETA projects.
Of the total ADB financial envelope for the GMS programme, only a relatively
small fraction is associated with agriculture. For the period 2012–2014, this alloca-
tion is US$111.5 million, i.e. 5 percent of the total financing estimated in US$2.2
billion. The major share still goes to the transport sector, amounting to 63 percent.68
Table 25 gives some examples of RETA projects and investments, both ongoing and
in the pipeline, that are targeting – one way or another – agricultural sector develop-
ment in the GMS corridors.
On some occasions, the budget allocation to the agricultural sector goes into
great detail. For example, a large part of the total MP3EI budget in Indonesia
(7.7 percent or US$30.66 billion) is dedicated to creating and improving supporting
infrastructure for specific value chains, including palm oil, rubber, cocoa, timber and
other food crops, as shown in Table 26.
The majority of the corridor programmes are requiring more and more financial
resources over time. Accordingly, resource mobilization efforts will need to be
stepped up to meet these financing needs. In addition to continued support from
the main champions (donors and IFIs) and countries themselves, the corridor
programmes should liaise with other development partners for greater financial sup-
port. The importance of accessing some of the newer and specialized global funds,
including those concerned with climate change and food security, is progressively
being recognized.
TABLE 26
Investments in agricultural value chains in the Indonesian economic corridors
Investments Sumatra Java Kalimantan Sulawesi Bali-NT Papua-KM Subtotal
US$ billion
Animal husbandry 0.80 0.80
Cocoa 0.35 0.35
Palm oil 5.01 5.40 10.41
Processed food 2.84 2.84

and beverages
Rubber 0.35 0.35
Timber 3.64 3.64
Various crops (e.g. 2.16 10.13 12.29

rice, maize and
soybeans)
Total investments 5.35 9.04 2.50 0.80 10.13 30.66
Source: CMEA (2011).
68
www.adb.org [last accessed August 2013].
Corridor programmes also need to tap private sources of financing more effec-
tively, and review various possible mechanisms, including guarantees and PPPs. The
latter modality is already being developed in some of the concerned countries, and
may be viable during the next decade in the rest of the developing world.
6.2 MODALITIES OF INTERVENTIONS

The corridor models identified propose various modalities of intervention to trans-
form classic transport corridors into effective economic corridors and make them
work for the agricultural sector. There is something that all the corridor models
agree upon: the need to design a holistic intervention that combines a smart-mix of
soft and hard instruments. Both hard and soft corridor components aim to reduce
the cost of doing business in the area and facilitate start-up and operation of busi-
ness ventures in their corridors. As mentioned earlier, hard interventions include
infrastructural elements such as roads, ports, railways, airports, energy and telecom-
munications networks, dams, irrigation infrastructure, market centres, warehouses,
dryports and other productive infrastructure. Infrastructure is a major contributor
to shaping the market along the corridor, but its development implies longer-term
higher cost investments. The financial situation of the corridor partners and the
baseline of the corridor will influence the choices and balances between soft and
hard interventions.
Soft interventions are those that deal with the development of institutions and
human resources aiming to build capacity to promote economic growth. Among
the soft interventions are the following:
Policy research and dialogue (e.g. border policies and national policies dealing with
land use, standards and public-private collaboration), treaties and streamlining of
procedures to improve ease of business in the corridor (e.g. legislation, regulation
and administration).
Improvement of BDS, such as agricultural marketing, extension services and
investment promotion.
Financial and risk management instruments.
Transport facilitation (e.g. shipping and port services, trucking, railways,
handling, warehousing, customs, insurance, banking and freight forwarding) and
trade facilitation, including customs cooperation.
Incentives for the development of regional integration initiatives.
Management of natural resources.
Human capital development and innovation (R&D and technology transfer).
Capacity building and organizational strengthening of both dedicated corridor
institutions and national and regional institutions involved in the implementation
of the corridor programme.
Soft interventions require fewer financial resources than infrastructure ones, but the
former investments improve capacities and institutions so that it is possible to raise
returns to hard investments. Most corridor subprojects or components (e.g. area
development plans, value-chain initiatives, clusters and SEZs) combine both soft
and hard features.
Another way to classify corridor interventions is according to their impact on two
corridor dimensions: broadness and national and/or regional scope (ADB, 2011c).
The width of a corridor is variable. A narrow corridor develops only in areas

immediately adjacent to the connecting infrastructure or transport backbone. Con-
versely, a broad corridor opens up into concentric rings of high economic density
along the transport axis. There are various ways to widen a corridor, for instance
by increasing the density of off-corridor nodes, improving last-mile infrastructure
in assets off the corridors, undertaking area development plans or supporting
value- chain and SME development. These activities are expected to help develop
surrounding areas, also by catalysing other investment from within and outside the
region and/or country.
An economic corridor can have only a national scope or can also incorporate
a regional dimension (Figure 18). A regional corridor facilitates the prioritization
of regional cooperation projects and activities, and coordinates national projects
among neighbouring countries. Conceptually, regional corridor projects comprise
projects that embody cross-border spillovers (positive or negative externalities),
which may then require joint or coordinated actions by two or more countries.
Good examples of these are pure regional goods such as sustainable use of shared
natural resources, controlling regional communicable diseases and air pollution.
While “regional” aspects of public goods are relatively straightforward to identify,
the line between the national and regional dimensions of a corridor is not always
easy to draw. Does the regional dimension include only projects with cross-border
externalities, or does it also cover joint (or even coordinated) projects across coun-
tries? What about “national projects with regional implications”? For the purpose
of this analysis, all these categories will be included in the definition of regional
corridor interventions, but it is also useful conceptually to recognize the intrinsic
duality of many corridor projects, as both a national entity and a regional one. This
implies that the same national corridor can have an increasing regional aspect to the
extent it reaches across borders.
The two dimensions of corridors – narrow/broad and national/regional – pro-
vide a useful framework to assess the components for the development of corridors
and their interrelations. This framework is presented in Figure 18, where the x-axis
shows the national/regional characterization of the corridor, representing increased
regionality of the corridor, moving right. The y-axis represents the narrow/broad
dimension, with increased broadening of the corridor moving up the axis. Together
these two dimensions divide the figure into four quadrants or zones. According to
these two features, two types of corridor interventions can be distinguished: those
to facilitate the transition from a national to a regional dimension (along the x-axis)
and those geared to broaden the corridor (moving along the y-axis).
Zone I represents the national and narrow stage of the corridor. It is a useful
starting-point, marked by the development of the corridor’s backbone infrastruc-
ture, or the upgrading of the existing one. This phase is intensive in hard investments,
which can last over several years and require an enormous amount of resources.
Depending on the type of corridor, from Zone I it is possible to move to Zone II
(national, broad) or III (regional, narrow). In terms of sequencing, Zones II and III
are interchangeable but quite distinct in content. The transition from I to II requires
interventions to broaden a national corridor, which are mostly the responsibility of
national governments, with or without the support of the international community.
Zone II is investment intensive because of a continued need for developing diverse
figure 18
Making economic corridors broader and regionally integrated
Broad
ZONE IV
National Regional
ZONE II
+ broad + broad
last-mile cross-border
infrastructure agroparks & SEZs
area contract
development farming
value chain
National Regional
ZONE III
ZONE I
+ narrow + narrow
roads and trade

railways facilitation
power &
telecommunic. logistics
ports
x
Regional
Source: author’s elaboration based on ADB, 2011c.
infrastructure, notably last-mile infrastructure that feeds into the major infrastruc-
ture supported under the first quadrant.
The movement from Zone I to Zone III symbolizes the adoption of measures
to support integration in a regional corridor. Figure 19 is a snapshot of a regional
corridor in Zone III that links three (narrow) national corridors crossing countries
A, B and C.
Rather than interpreting the regional corridor as an extension beyond national
boundaries of three different corridors, it is more usefully viewed as the subsequent
stage of reducing national barriers through transport and trade facilitation measures.
Figure 19 shows an example of complementary national interventions to increase
regionality on two levels: among the participating countries and complementarity
between integration hardware and software initiatives. The focus of Zone III is on
transport and trade facilitation, i.e. moving goods and people easily and cost effi-
ciently from place to place, which in Figure 19 is a port in Country A and another
in Country C.
Developing Zone III requires facilitating regional cooperation through several
coordination mechanisms, such as regional blocs or dedicated corridor bodies that
pursue regional integration. Zone III is relatively investment light, with the focus
being on creating or strengthening the software for the physical infrastructure
already in place (e.g. within the border policies, transport facilitation and trade and
investment promotion).
Zone IV marks the last stage of development of a regional corridor, which
becomes a broad and seamless regional entity. Movement towards Zone IV cor-
figure 19
Example of a narrow, regional corridor (Zone III)
Country A Country B Country C
Investment loans, Investment loans, Policy

guarantees and grants guarantees and grants interventions
Investment
Policy Policy loans, Policy
interventions interventions guarantees interventions
and grants
Integration hardware Non-financial products Integration software

Strategic initiatives
Roads Trade/investment
Research and agreements
Airports development
Trade facilitation/
Ports Policy dialogue logistics
Border initiative Capacity building Trade/investment
promotion
Source: IaDB, 2011 (adapted with permission).
ridors may require joint regional plans, or joint plans for cross-border area develop-
ment (clusters, SEZs, etc.) by the concerned countries or, at the least, coordination
of national plans. The alternative, of coordinating national plans (including private
sector investment and activities), is often the most viable option.
This framework shows a sequence across the four zones, with Zone I preceding
Zones II and III, which in turn pave the way for Zone IV development. The next
sections detail the types of measures that are characteristic of each zone and those
needed to broaden and deepen or “regionalize” a corridor, i.e. to move from one
quadrant to another.
6.3 LAYING THE CORRIDOR BASIS: INFRASTRUCTURE DEVELOPMENT

Corridors in Zone I focus on creating, expanding and rehabilitating infrastructure
stock within the corridor. Zone I interventions tackle both the hard and the soft
aspects that need to work together to make the infrastructure backbone of the cor-
ridor as efficient as possible. Overcoming infrastructure failure is expected to lead to
increased firm competitiveness and enhanced delivery of public services.
When key connective infrastructures and facilities are not in place, or require
upgrading and upscaling, the corridor programme needs to come up with a strategy
to address these bottlenecks. In these cases, the magnitude of the resources pooled
together may be substantial - especially when confronted with demand for large
infrastructural investments. Therefore, the participation of both the public and
private sectors is required. Should the infrastructure gap be considerable, incentives
and other support measures may be provided for greenfield developments, as noted
in the African agricultural growth corridors.
When analysing infrastructure interventions (Zone I) of the six corridor initia-
tives appraised, four issues emerge as worth highlighting. The first is the prioritiza-
tion of high-impact infrastructure, namely roads, railways, ports and energy. The
second refers to the sequencing of interventions: what comes first, infrastructure
development or interventions in agriculture and other selected economic sectors?
Third, three different ways of approaching the infrastructure component in an
economic corridor programme have been observed. Finally, there is a discussion on
the increasingly important role of the private sector in the financing, development
and management of corridor infrastructure projects through PPPs.
The corridor programmes studied have favoured high-impact infrastructure
improvements, particularly highways and ports. Within this high-impact category,
two main types of infrastructure can be distinguished. The first is physical con-
nectivity to reduce transportation costs, and travel and border crossing time. The
second encompasses telecommunications and energy to reduce business costs.
Many corridor programmes also enhance last-mile infrastructure, but this type of
intervention belongs to the second quadrant and, hence, will be analysed in section
6.4. Box 11 provides an overview of the way in which BAGCI and SAGCOT tackle
infrastructure development in their respective corridors.
Removing infrastructure bottlenecks is often the main budget ticket of the cor-
ridor programme. This is the experience of GMS and CAREC to date. As of 2011,
priority infrastructure projects worth approximately US$10 billion were completed
or about to be completed in the GMS area, with road networks representing the
largest share (ADB, 2012a). CAREC had invested over US$21 billion in major
infrastructure by the end of 2012. In both cases, the lion’s share of this figure went
to the development of road and railway networks: an indicative 63 percent of the
total budget for the GMS, and 79 percent for the CAREC programme.
At present, road infrastructure projects are almost complete in the GMS.
However, certain gaps remain, regarding multimodalism (particularly inclusion of
rail and inland water navigation), the improvement of logistics and other software
elements (e.g. road safety, enhanced competition in the transport sector and climate
proofing of transportation infrastructure) and the development of some corridor
sections in Myanmar (ADB, 2010f). CAREC has also built and improved some
3 600 km of road and almost 2 000 km of railway track (ADB, 2011f), but important
expansions and enhancements are still required. The current emphasis is on final-
izing the road and rail networks and on enhancing the software partnering with
transporters and other private actors. The approach to building and rehabilitating
these roads and railway lines has mostly been national, in the sense that each coun-
try has taken responsibility for the sections of the transportation backbone of the
three corridors and nine subcorridors that fall within its territory. Yet, put together,
all these projects form the puzzle of regional road and railway networks ensuring
intra- and intercorridor transport connectivity.
BOX 11
How BAGCI and SAGCOT approach infrastructure development
BAGCI distinguishes between major connective infrastructure (e.g. roads, railways and ports)
and last-mile infrastructure (AdDevCo and InfraCo, 2010). The latter infrastructure is clearly
lacking, whereas overall transport infrastructure is fair along the corridor (ibid.). The Beira
Blueprint has provisions only for improving last-mile infrastructure, whereas the Mozam-
bican Government undertakes investments in major transport infrastructure with funds from
its regular budget, donors, loans from international financial institutions and PPPs. SAGCOT
follows the same approach.
The Beira Corridor has a multimodal, mostly functional, transport backbone com-
posed of a road network among urban centres that is considered adequate: the Sena and
Machipanda railway lines69 and the port of Beira70. The railway lines and the port have
attracted private firms to take care of their management and invest in their expansion
(Domínguez-Torres and Briceño-Garmendia, 2011). The port of Beira has been privately
operated since 1998, when its general cargo and terminals management and operation
were conceded to a Netherlands company (ibid.). Similarly, the two railway lines serving the
corridor were given in concession to Indian consortia in December 2004.71 BAGCI’s road net-
work has recently seen a revamp in investment and rehabilitation, with a second-generation
road fund set in place (Domínguez-Torres and Briceño-Garmendia, 2011). Likewise, the
Sena railway line has recently been rehabilitated and the port of Beira is undergoing a major
upgrade, with channels being dredged to allow the transit of larger vessels, and handling
capacity being doubled from five to ten million tonnes (ibid.). Funding for the port upgrade
comes from several development agencies, multilateral banks and private investors. The
Danish International Development Agency (DANIDA)72 is funding the rehabilitation of some
parts of Beira airport.
In the SAGCOT case, there are several relevant ongoing investments in backbone infra-
structure by the GoT, development institutions and private companies, as summarized in
Table 27. Furthermore, in the 2010–2015 period, public investments of US$445 million are
required to improve the rural road network, mostly coming through the national budget
(SAGCOT, 2010).
Under current conditions in SAGCOT, much of the immediate upfront expenditure
required for new farming projects and farm improvement is in the last-mile infrastructure
connections, with an estimated budget envelope of US$570 million. With access to patient
capital, private players can manage the implementation of these investments, which should
provide a financial return over the long term (WEF, 2012).
69
The 680 km-long Sena line linking the port of Beira to the coal-mining town of Moatize and the
Malawian border, and the Machipanda railway line between Beira and Harare, Zimbabwe.
70
As explained earlier, the port of Beira acts as an international gateway, not only for Mozambique,
but also for the region’s landlocked countries – Malawi, Zambia and Zimbabwe.
71
Rail India Technical and Economic Services (RITES) Ltd and IRCON International.
72
http://um.dk/en/danida-en/ [last accessed July 2013].
BOX 11 (Continued)
Among other things, the ongoing upgrade of major infrastructure in both corridors offers
a great potential for strengthening channels to markets for agricultural producers. For this
potential to be realized, the charges for use of these facilities should be affordable for agri-
cultural players, particularly in the early years of corridor development (AgDevCo and InfraCo,
2010). The expected decrease in transport costs will likely have a favourable impact on the
competitiveness of Mozambican and Tanzanian agricultural production and agro-exports.
Besides the anticipated investments in transport and last-mile infrastructure, major
anchor investments in the mining sector, proposed and under way in BAGC, will probably
impact the corridor infrastructure. On the one hand, mining activities – among them, two
very large mining projects in construction near Tete, with a combined potential to produce
approximately 13 million tonnes of coal by 2015 – are expected to drive marked improve-
ments in transport, power and water infrastructure (ibid.). The agricultural sector will pos-
sibly be one of the most important beneficiaries of these infrastructure enhancements (ibid.).
On the other hand, the rising demand for transport of the mining sector poses an enormous
hurdle both institutionally and financially, as the size of the road and rail network seems to
overshadow the national capacity to fund its rapid expansion and maintenance. The com-
bined transport demand of the mining and agricultural sectors in the corridor will require
additional sustained and massive investments over decades, with the participation of the pri-
vate sector and non-traditional financiers (Domínguez-Torres and Briceño-Garmendia, 2011).
TABLE 27
Investments in backbone infrastructure along SAGCOT
Backbone
Donor and budget in US$ million Item financed
infrastructure
Railway network China: 39 Tanzania-Zambia Railway

Authority (TAZARA) railway
Road network AfDB: 230 and Japan International Dodoma-Iringa road

Cooperation Agency (JICA): 87.7
Millennium Challenge Corporation Tunduma-Sumbawanga road

(MCC): 373 and others
DANIDA: 84.8 Tanzam highway
Power network EU: 4.7; MCC: 206; Swedish

International Development Agency
(SIDA): 70; Rural Energy Fund: 6.8
Ports Tanzania Port Authority: 18 Dar es Salaam (Dar) Port upgrade
Tanzania Port Authority: 80 New liquid bulk terminal
Yara: 20 Dedicated fertilizer terminal

at Dar Port
DSM Corridor Group: 4 Bulk fertilizer terminal at Dar Port
DSM Corridor Group and East African Dry port at Mbeya

Trading Company: 10
Source: WEF, 2012.

In Peru, the infrastructure component of the project did not fund the develop-
ment of transport infrastructure through loans and grants, but assisted the GoP to
develop an infrastructure PPP scheme to tap private investments and manage the
existing stock more efficiently. This assistance also prepared the GoP to programme
and manage key infrastructural projects of corridors through a national project and
negotiate their insertion as priority in the IIRSA pipeline.
Indonesia plans to invest over US$177 billion in general infrastructure serving the
six economic corridors. This represents an annual investment of over 1.25 percent of
the country’s GDP. Most of this investment goes to road and railway infrastructure
followed, inter alia, by energy, ports and airports (CMEA, 2011).
In Mozambique and the United Republic of Tanzania, the main roads and
railway lines of the corridors were in fair condition, but needed some upgrading
and/or expansion. In these corridors, infrastructure projects have been linked to
the extraction of agricultural commodities from producing areas or agrobased
clusters to ports and large consumer centres (Beira and Dar es Salaam). These
two experiences can offer useful policy lessons about best practices and pitfalls
of commodity-led infrastructure development in Africa and its potential to pay
growth dividends.
Ports are as strategically important for corridor growth as roads and railway
lines. Most economic corridors are anchored by ports, which are essential for
intraregional trade (GMS) and exports to distant markets. For example, GMS
transport corridors end at large port complexes that are located near dynamic
agricultural and industrial areas. Some corridors even take their name from the port
that serves as the main gateway, as in the case of BAGC, which ends at the port of
Beira. Interventions related to port development belong to Zone I because, even if
the port serves as the gateway for a regional corridor, responsibility for developing
or upgrading the port and managing it falls within the national sphere.
The corridor programmes studied often encompass the development or upgrad-
ing of sea and river ports. For example, Table 28 gives a list of the major river and
sea ports along the GMS corridors. However, these ports work as secondary ports
that then feed two major hub ports in Asia: Hong Kong and Singapore.
Other examples of ports that have been upgraded as part of the corridor action
plan are the port of Dar es Salaam (United Republic of Tanzania), and the port of
Callao (Peru), which are the principal international gateways for agricultural goods
produced in the SAGCOT and PRA corridors, respectively. An example of the
development of a new port is the project for developing a deep seaport in Dawei,
Myanmar, which is at the western end of the SEC. This port is essential for China
and the rest of the Mekong countries to reach the Indian Ocean.
Secondary or feeder ports serving hub ports are also important for intracorridor
connectivity. Cases in point are the inland ports on Lakes Tanganyika and Nyasa in
the SAGCOT corridor. Other examples are the seaport of Paita and the river port
of Yurimaguas in the Peruvian corridors analysed, and the ports of Da Nang and
Hai Phong in Viet Nam, which are part of the EWEC. CAREC has also upgraded
some river ports (ADB, 2011f). Indonesia, as an archipelago nation, has allocated
US$11.4 billion of the overall MP3EI budget envelope to developing new ports
(international hub, regional hub and feeder ports) and upgrading existing ones
(CMEA, 2011).
TABLE 28
Major river and sea ports along the GMS corridors
Country Port Location
Cambodia Sihanouk Ville Sea
Cambodia Phnom Penh River
Myanmar Yangon River
Myanmar Thilawa River
Myanmar Maulamyaine Sea
Myanmar Dawei Sea
Viet Nam Saigon River
Viet Nam Thi Vai and Cai Mep River
Viet Nam Qui Nhon Sea
Viet Nam Danang Sea
Viet Nam Hai Phong River
Viet Nam Cailan Sea
Source: Ishida, 2009.
The second most important category of corridor general infrastructure is that of

energy and telecommunications. CAREC has allocated somewhere between 15 to
20 percent of its budget to improving national energy security, efficiency and distri-
bution in the participating countries (CAREC, 2012). Something similar could be
said of GMS. Investments in energy and telecommunications are also an essential
part of the Peruvian, Indonesian, Mozambican and Tanzanian corridors.
The development of corridor infrastructure is most effective when planned in a
comprehensive manner. This means an understanding of how the road, power and
telecommunication networks interact with each other within the corridor. One
possibility is to put in action an integrated approach to infrastructure improve-
ment in the framework of the development of clusters and SEZs. This is the case
in the Indonesian and Beira Corridor initiatives. The former corridor programme
envisages a multifaceted intervention that comprises, inter alia, the development of
interconnected agrobased clusters and SEZs with an agro-industrial component,
including tailor-made regulatory and policy support to promote agribusiness
investments in selected locations and value chains; and infrastructure development,
both connective and agriculture-supporting infrastructure, planned around growth
centres linked to agrobased clusters and SEZs (CMEA, 2011). Figure 20 is a graphic
representation of this approach.
BAGCI also follows a cluster approach whereby agriculture is promoted around
existing and planned infrastructure, namely improved road and rail networks to
access domestic and export markets, and electricity and water supplies for irrigation
(AgDevCo and InfraCo, 2010).
Figure 18 underlined Zone I as the starting-point of any corridor intervention.
The sequencing proposed entailed a first stage of infrastructure development fol-
figure 20
Insertion of SEZs in Indonesian corridors
Supporting
Main roads linking infrastructure: ports,
economic centres airports, power supply
Economic growth
centres: commercial
centres of trading hubs
Suggested
SEZ connectors
Supporting infrastructure
linking economic activities Main economic activities
prioritized in the corridor
Main roads Economic centre Port Electricity
Supporting Cluster Airport SEZ

connectivity
Source: author’s elaboration based on CMEA, 2011.
lowed by a lateral movement along the y-axis to Zone II or along the x-axis to Zone
III. This was a clear generalization. A glance at the experiences appraised shows that
the “normal” sequencing (from Zone I to II or III) has been followed in five out of
the six corridor cases.
The Peruvian case has been the exception to the rule. As already explained,
the Peruvian corridor programme did not start with interventions in Zone I, but
focused on measures typical of Zone II. Consequently, the PRA Project launched
interventions to widen the existing transport corridor (operational but underper-
forming), before a single cent was invested in upgrading and rehabilitating the
transport backbone of the corridors. This implies that there is room to invert the
sequencing of corridor progress among the quadrants and zones as long as there is
a minimum degree of connectivity. Such connectivity can be improved in parallel or
with some delay with respect to activities performed in Zone II, but businesses will
face higher transaction costs in the meantime.
The case studies have revealed the existence of three approaches to infrastruc-
ture components in the framework of an economic corridor initiative, as elucidated
in Figure 21.
figure 21
Degrees of IFI/donor support for developing corridor infrastructure
No support Technical Funding through

assistance grants and loans
GMS BAGCI
MP3EI PRA CAREC SAGCOT

- +
One approach is that exemplified by the Indonesian corridors. The Government

allocates (a substantial) part of its national budget to the development and upgrade
of general corridor infrastructure. Since this is a long-term and resource-intensive
enterprise, not all governments have the necessary resources or borrowing capacity
to undertake a comprehensive corridor infrastructure programme on their own.
Indonesia, as a middle-income country that is growing at 6 to 7 percent annually,
may be in a position to do so. However, this may not be the case of less well-off
nations, particularly those that have a somewhat underdeveloped infrastructure
stock. In this case, donors can provide loans and grants to national governments to
fund the infrastructure works needed. This is the modality adopted in the African
and Asian corridors. In the latter, contributions by international financial institu-
tions (IFIs) and donors are matched with funds from the countries up to a significant
level: 26.5–26.6 percent of total investment in the CAREC and GMS programmes,
i.e. US$2.76–2.77 of development partner money for each dollar of national contri-
bution. The third approach is somewhere in between these two extremes. A good
illustration is the Peruvian experience (see Box 12), in which a donor offers TA
to develop and field test a model for infrastructure PPPs as opposed to offering
loans and direct implementation. This assistance includes a couching period during
which the corridor programme facilitates the first transactions undertaken using the
enhanced PPP model. Field testing provides an excellent opportunity to fine-tune
the related regulatory and legal frameworks and build the capacities of the national
agencies involved in these procedures.
The fourth issue mentioned earlier is the increasing importance of engaging
the private sector in the corridor programme via infrastructure PPPs. All the cor-
ridor initiatives reviewed have acknowledged the convenience of using PPPs to
tap private sources more effectively in order to finance infrastructure works. This
modality is already being developed in some countries of the GMS subregion (e.g.
China and Thailand), and may be transferred to the remaining members during the
next decade. The GMS Business Forum plays a key role in fostering the expansion
of PPPs for infrastructure development in these corridors. In Peru, the develop-
ment of an improved model for infrastructure PPPs has been the cornerstone of the
infrastructure component of the corridor programme. Indonesia’s MP3EI also relies
on this scheme to co-fund a large part of the planned infrastructure improvements.
BOX 12
The infrastructure component of the PRA Project
Two features distinguish the PRA corridor intervention from the GMS and CAREC pro-
grammes: the inversion of the sequential interventions (which component goes first, soft
or hard); and how infrastructure development is financed (i.e. direct financing through
loans from IFIs and government budgets or facilitation of infrastructure PPP design and
implementation). Unlike GMS and CAREC, the PRA Project did not wait to have improved
infrastructure in place to launch soft components seeking to capitalize on the economic
impacts of the enhanced connectivity. It started providing BDS in the selected corridors to
promote business growth, even before launching the infrastructure PPP component, making
the most of the existing, albeit limited, transport infrastructure.
In 2001, as a first step, the PRA Project conducted a study to quantify the economic
losses that socio-economic agents in the economic corridors were incurring because of
poor transport and energy infrastructure. Up to 24 infrastructure projects were assessed
to determine which ones would potentially yield the highest direct economic benefits. The
rehabilitation of the Tarapoto-Aucayacu stretch of the Fernando Belaúnde Terry (FBT) high-
way, in the San Martín region, was deemed the project with the highest estimated impact.
The Project held a series of meetings to inform Peruvian members of Congress and senior
government officials on the study findings. However, it soon became apparent that the GoP
had neither the necessary financial resources nor the capacity to borrow beyond the estab-
lished public debt ceiling, already capped.73 Eventually, the Project adopted a two-pronged
strategy. First, it joined forces with the Tocache Group – a lobby group formed by a broad
cross-section of public officials, private firms and NGOs in the department of San Martín
– to promote the rehabilitation of the FBT highway. The Tocache Group considered out-of-
the-box financing solutions, such as relinquishing the tax exonerations that the department
enjoyed at the time and earmarking the resulting revenues for the highway. The idea gained
traction and became law in 2005.
The second prong of the strategy drew inspiration from the active involvement of busi-
ness people in the Tocache Group, and more broadly from corporate participation in trans-
port infrastructure development and management – a fairly widespread phenomenon across
OECD countries. USAID provided additional funding to formalize the infrastructure PPP
component “to explore the potential of concessions as a way to leverage capital investment
in transportation by the private sector, both domestically and abroad” (USAID, 2008a). The
PRA Project provided TA to ProInversión, the Peruvian agency in charge of implementing the
national infrastructure concessions programme, from the onset of each concession project
design through to transaction closure. Between 2003 and 2007, the Project and ProInversión
worked together with the Ministry of Transport and other public entities in designing and
implementing five projects: three highways, the expansion of the main Peruvian port and
one energy project, summarized in Table 29.
73
GoP and PRA/USAID noted that current and projected government budgets – even when
supplemented with donor infrastructure loans – fell far short of meeting the country’s infrastructural
requirements.
BOX 12 (Continued)
TABLE 29
PRA-facilitated infrastructure developments
Item Cost (US$ million) Corridors involved
IIRSA North highway (964 km) 220 Piura (coast),

Jaén and Tarapoto (port
of Yurimaguas), thus
enabling river transport
to and from Manaus, Brazil
FBT Highway (450 km) 162 Tarapoto, Huánuco and

Pucallpa
IIRSA Central highway (867 km) 115 Connecting Lima with

the corridors of Junín,
Huánuco and Pucallpa
Callao port
(Southern Container Terminal)
Phase I 364 Serves all corridors
Phase II 253
Four rural electric systems 10.1 Ayacucho, Pucallpa

and San Martín
Source: www.proyectopra.com [last accessed August 2013].
As mentioned earlier, the PRA Project neither directly financed nor built roads and
ports, but supported the GoP in designing, structuring and implementing innovative PPP-
concession business schemes and transactions to attract private investment and expertise
to finance, build, operate and maintain in the long term highways, ports and energy
infrastructure projects. Its PPP work resulted in US$584 million in private capital investment
commitments to build and rehabilitate roads (IIRSA North highway) and port infrastructures
(state-of-the art container terminal and improvements to overall Callao port facilities) during
the life of PRA I (USAID, 2008a), and an additional US$115 million in road infrastructure
investment commitments (IIRSA Central highway) proposed for the national five-year infra-
structure investment plan from 2012 to 2016 (BNamericas, 2012).
The hallmarks of the PRA Project intervention in infrastructure were:
innovative PPP design and financing schemes to engage private sectors in otherwise not
so attractive concessions;
intense promotional campaigns to ensure the participation of both national and inter-
national bidders;
the vocation to transcend the corridor programme and propose a PPP scheme for coun-
trywide and multisectoral application.
BOX 12 (Continued)
When the Project’s infrastructure component started operations, there were already some
ongoing infrastructure concessions in Peru. However, Peru’s complicated geography makes
corridor infrastructure projects expensive, and thin domestic markets prevent many con-
cessions from meeting the private sector’s expectations in terms of revenue generation.
Furthermore, concessions frequently encountered problems pertaining to crossing fibre
optic networks and legal and social issues regarding land acquisition and expropriation
(BNamericas, 2012).
The Project’s main contribution was the introduction of innovative transaction design
features to the existing Peruvian infrastructure concession model, in order to improve not
only the bankability and attractiveness of the concessions, but also to protect the public
interest by providing mechanisms to share larger than expected revenues. For example,
the Project introduced state-of-the-art financial engineering schemes to make the projects
more enticing for private investment. One such scheme was developed for the IIRSA Central
highway concession. To make up for the expected insufficient stream of toll revenues on
this highway, the GoP agreed to provide a minimum revenue guarantee (determined at the
bidding stage). A safeguard mechanism was also introduced – should revenues be higher
than expected, a public-private revenue-sharing mechanism would be deployed. Another
example is the case of the IIRSA North highway concession. The GoP introduced annual
payments for construction (i.e. securitization of construction progress certificates prorated
to the advancement of work), and payments for operation and maintenance of up to US$15
million, with collections from tolls deducted from the yearly payment. The transaction was
further enhanced by a partial credit guarantee from IaDB to cover the GoP’s payment obli-
gations for an amount up to US$60 million74 (USAID, 2008a). Moreover, a revolving US$60
million bridge loan was negotiated with the Andean Development Corporation to avoid
delays on the commencement of construction works, while the winning concessionaire
managed to secure long-term financing (USAID, 2006).
In the case of the FBT highway, one of the key features of the financing scheme was the
creation of a trust fund specifically earmarked for the completion of the highway, fed by the
proceeds of the value-added tax (US$14 million annually for 50 years) upon the elimination
of the fiscal exoneration (upon request of local, provincial and regional governments of the
corridor) that the department of San Martin had up to then enjoyed (ibid.). The enhanced
model also emphasized the adoption of good design practices to minimize the need to make
substantial modifications during contract execution, e.g. completing the appropriate techni-
cal prefeasibility, feasibility and environmental studies, as well as studies on land acquisition
before awarding the concession.
The PRA Project conducted an aggressive local, regional and international project pro-
motion campaign to ensure competitive and transparent bidding processes. It also prepared
promotional brochures, sent information bulletins to over a hundred firms and conducted
road shows targeting high-level government officials in South America (USAID, 2008a).
74
www.proinversion.gob.pe [last accessed May 2013].
BOX 12 (Continued)
Eventually, these promotional efforts to foster the participation of international bidders for
the concession contracts yielded fruit. The IIRSA North highway concession contract was
granted to a consortium of Brazilian and Peruvian firms, and that of the new container ter-
minal in the port of Callao to a Dubai-Peruvian consortium. These concessionaries brought
with them not only ample financial resources but also first-class technical expertise and
managerial expertise (ibid.).
The infrastructure component transcended the mandate and lifetime of the project. In
2006, the Peruvian Ministry of Transport and Communications approved the Transport Sec-
tor Policy, which specified that transport infrastructure was “[...] not an end in itself, but
an appropriate means to foster safe, efficient and quality transport services”75 that help in
improving the competitiveness of economic corridors, thus mainstreaming the PRA model.
Furthermore, in 2007, the Ministry created the “Project Peru programme”,76 designed to
improve road infrastructure to connect and integrate economic corridors better, forming a
sustainable development axis in order to raise the competitiveness of rural areas. The Peru-
vian concession programme for transport infrastructure under the PRA-designed PPP model
has kept the momentum going. The regulations of this model were published in 2008 and,
as of March 2012, there were 26 transport infrastructure contracts, 14 of which involved
highways, amounting to an investment of US$3.5 billion (BNamericas, 2012).
Efforts to improve the competitiveness of Peruvian economic corridors through infra-
structural improvements have been further developed under IIRSA, the UNASUR umbrella
programme mentioned in Chapter 3. This programme has taken the IIRSA North highway
and transformed it into a multimodal transport corridor connecting the Pacific (from the
port of Paita on the north coast of Peru) and Atlantic Oceans, through the Brazilian State
of Amazonas via three PRA corridors (Sierra La Libertad, Jaén and Tarapoto). The main
infrastructural works in the multimodal corridor are the concession of the port of Paita
(granted in March 2009 for US$227.8 million), and a logistics platform in Paita; the IIRSA
North highway between Paita and the city of Yurimaguas in the Tarapoto corridor; a port,
airport and logistics centre in Yurimaguas; and other facilities in the inland water transport
corridor formed by the Huallaga, Marañón and Amazon rivers between Yurimaguas and the
industrial pole of Manaus, capital of Amazonas State.77
The African agricultural growth corridors use PPPs intensively in various fields,
including infrastructure PPPs such as the one mentioned regarding the management
of the main ports and railway lines. In particular, they pay attention to ensuring the
correct supervision and monitoring of infrastructure PPPs.
75
Ministerial Resolution 817/2006-MTC/09, dated 7 November 2006.
76
Ministerial Resolution 223/2007-MTC-02, as amended by Ministerial Resolution 408/2007-MTC/02.
77
www.iirsa.org [last accessed July 2013].
6.4 COMPONENTS GEARED TOWARDS WIDENING NATIONAL CORRIDORS

Measures undertaken under Zone II try to address falling trade and rising costs
of business, which are among the main contributing factors to a slowdown in
economic growth in developing economies. Zone II includes activities that may
broadly be termed “area development plans” aiming to develop linkages to the local
economy through last-mile or feeder infrastructure; business linkages to producer
organizations and SMEs; improvement of urban infrastructure; promotion of indus-
trial development; and investments in tourism infrastructure.
The scope of this section is intentionally limited to interventions that add the
agricultural dimension to a narrow national corridor. Certainly a narrow corridor
could gain in width by developing other economic activities (mining, tourism,
banking, etc.), but this possibility will not be investigated here. While the inter-
ventions above refer to government initiatives, considerable private investments
are also required to achieve meaningful development impacts. This will require
public policies that encourage crowding in of private investment, and utilize PPPs
as appropriate.
To go from Zone I to II, corridor planners can design an agricultural plan or
strategy detailing all the planned interventions. These interventions can be classified
into two main categories: those that improve the corridor hardware, and those that
enhance its software.
The hardware category comprises improvements in last-mile infrastructure (e.g.
feeder roads, irrigation and small dams), and food-specific infrastructure such as
wholesale markets, collection points and warehouses. Building last-mile infrastruc-
ture is a way to open up the corridor towards the agricultural hinterland with farm-
to-market roads and provincial road networks to increase mobility, accessibility
and affordability, creating the conditions (functional electricity, transportation and
communication infrastructure) to foster agribusiness development. Additionally,
the development of secondary or rural roads that link to the corridors, expanding
the market and effectively linking agribusiness companies to competitive suppliers
of goods and services (such as producer and business associations, ports, customs
and rail and road systems) would also contribute to corridor widening. See examples
of interventions on last-mile infrastructure in Box 13.
The second category, i.e. food chain-supporting infrastructure, serves as a basis
for creating a diversified service industry that includes warehousing, distribution,
wholesale and retail operations. This is a critical step towards a more efficient
management of the agricultural supply chain, so that it is possible to tap the
potential savings resulting from efficiency in private sector logistics by stream-
lining areas such as warehousing, shipping, certification and inventory control
(Banomyong, 2008).78
78
http://www.yara.com/sustainability/how_we_engage/africa_engagement/growth_corridors/
index.aspx [last accessed August 2013].
BOX 13
Examples of last-mile infrastructure development in economic corridors
The BAGC and SAGCOT initiatives emphasize the importance of developing last-mile infra-
structure to alleviate critical constraints hindering commercial agriculture in their respective
corridors. Specifically, investments are needed to overcome the low accessibility in rural
areas to all-weather feeder roads79 and power networks, and the lack of adequate irriga-
tion infrastructure.
BAGCI plans to upgrade sections of rural roads and critically expand coverage in strips
of high agricultural potential land in the northern part of Tete, southwestern Manica and
east of Dombe in Mozambique (AgDevCo and InfraCo, 2010). It also envisages enhancing
the coverage of power networks in the Beira Corridor which, although reasonable, leaves
many areas of fertile agricultural land unattended. Likewise, the current irrigation area
will be expanded significantly to take advantage of the country’s generous endowment of
water resources (Domínguez-Torres and Briceño-Garmendia, 2011). Out of BAGCI’s target
of US$1.7 billion of private investment, the majority of investment costs pertain to last-mile
infrastructure, including on-farm (irrigation) and off-farm infrastructure, which includes the
costs of bringing road access, power and water to the farmgate. Estimated investment costs
are distributed as shown in Table 30.
Similarly, the SAGCOT blueprint calculates that US$108 million will be needed for mar-
keting, storage and processing infrastructure along the corridor, including processing/milling
facilities, warehouses and cold storage, and a network of wholesale markets and collection
points. Some of these facilities and infrastructure are likely to be funded publicly (e.g. whole-
sale markets), and others commercially (agroprocessing plants). However, patient capital will
probably be needed to help the private sector to achieve economies of scale and ensure
strong farmer-firm linkages in the initial years of the corridor programme (WEF, 2012).
The GMS programme has also developed agriculture-specific last-mile infrastructure,
such as agrifood wholesale markets, warehouses, logistics and trading centres and feeder
roads linking priority agricultural and agro-industrial hotspots in the corridor with major
transport links (ADB, 2008b; 2011a). For instance, fresh primary and wholesale markets
have been constructed, at a cost of US$150 000 each, in certain segments of the GMS cor-
ridors, particularly in the Lao People’s Democratic Republic, to facilitate the participation of
smallholder farmers in agricultural marketing chains (Zola, 2009).
The CAREC programme finances and develops different types of infrastructure in a
sequencing manner. In the first phase, the focus is on developing the transport backbone
of the corridors. Then comes the turn of last-mile infrastructure, including: (i) infrastructure
of corridor towns, such as agricultural collection points, wholesale markets and agricultural
warehouses; (ii) agrobased cluster infrastructure; and (iii) infrastructure and facilities that
contribute to ensuring that the agricultural products originating from different areas along
the corridor meet the standards required by domestic or foreign markets (ADB, 2012e).
79
The countrywide rural accessibility level is only 24 percent, and over 40 percent of rural roads are in
poor condition (Domínguez-Torres and Briceño-Garmendia, 2011).
BOX 13 (Continued)
TABLE 30
Estimated investment costs in the Beira Agricultural Growth Corridor
US$ million Percentage
In-field irrigation 739.0 42
Off-farm infrastructure 380.2 22
Working capital 107.0 6
80
Other farm capex 516.3 30
Total 1 742.5 100
Source: AgDevCo and InfraCo (2010).
These interventions appear in the GMS, CAREC, Indonesian and African expe-
riences, but it is in the BAGCI and SAGCOT cases that they are given paramount
importance. The targets set for last-mile infrastructure in these two corridors are
so significant that, in order to be able to achieve them, the corridor supporters
provide financial support and foster an innovative scheme where infrastructure
service companies (ISCs) play an important role in financing and developing last-
mile infrastructure. An ISC is a private firm that secures patient capital to build
agriculture-supporting infrastructure that it then leases to medium-size commercial
farms and producer organizations.
An action plan to broaden and deepen an economic corridor by fostering
agricultural growth is likely to include a complex set of soft investments. These
software interventions can be delivered by using different mechanisms, can have
various entry points and can encompass a long list of thematic areas, as illustrated
in Figure 22.
Corridor delivery mechanisms. Indonesia and the GMS and CAREC programmes
have followed the first approach shown in Figure 22 of mainstreaming these inter-
ventions into their regular activities.
Other programmes, given the complexity and variety of soft interventions
planned for promoting agricultural growth, have decided to establish corridor
centres with dedicated staff and facilities to roll out all or some of the planned soft
interventions. This has been the choice of the PRA Project, BAGCI and SAGCOT
80
Other capital spending or money spent to acquire or upgrade physical assets such as buildings and
machinery.
figure 22
Soft interventions to promote agricultural growth along an economic corridor
Delivery mechanisms Entry points Thematic coverage
1. Soft interventions 1. Individual firms and producer 1. Behind-the-border policies and

mainstreamed in public organizations regulatory systems
programmes and coordinated 2. Value chains 2. Non-financial BDS
by working groups (e.g. investment promotion,
3. SDIs such as agrobased clusters,
2. Corridor-dedicated tools such SEZs and agro-industrial parks brokering of market linkages,
as corridor centres (PRA ESCs), extension and managerial
financial facilities (e.g. SAGCOT assistance)
Catalytic Trust Fund) 3. Financial support
and institutes (GMS Institute) and risk management
4. Natural resources management
and green growth
5. Capacity building in agricultural
science and technology
6. Skills development programme
through agricultural training,
R&D and technology transfer
7. Institutional strengthening,
corridor governance
and coordination
– see examples in Box 14. The main functions of these centres involve coordination,
investment promotion and the provision of BDS.
Similarly, some programmes have adopted corridor specific instruments such as
the catalytic finance funds deployed by BAGCI and SAGCOT.
As depicted in Figure 23, BAGCI has put in place dedicated financial facilities to
support socially responsible agribusiness companies (Catalytic Fund) and farmers
located in the corridor. Support to farmers is provided through the Smallholder
Support Facility, which awards grants for implementing innovative models for the
delivery of public goods and services to smallholder farmers.
SAGCOT has set up a sister fund of the BAGC Catalytic Fund: the SAGCOT
Catalytic Trust Fund (CTF). See Box 15 for further information about these
corridor-bound funds.
Entry points. The soft interventions planned can have one or more entry points
in the agricultural sector. They can target agribusiness firms and farmer organiza-
tions along the corridor involved in collaborative arrangements (linked through
contract farming and outgrower arrangements) to help them improve day-to-day
operations and find medium- and long-term solutions (adapted from UNCTAD,
2004; 2008; 2009b). This reflects the idea of sustainable, inclusive business models
contained in the blueprints of BAGCI and SAGCOT, as will be further analysed
in section 7.2.
BOX 14
Corridor centres
As seen in Box 8, the PRA Project set up an ESC in each corridor to provide BDS to targeted
farmers and client firms.
BAGCI has set up two Agri-Services Centres in Chimoio and Beira to provide agribusiness
support services to investors, farmers and other users. These centres play a key role in promot-
ing both greenfield and brownfield investments. One of their main activities is to collaborate
in the development of a database of current and planned agribusiness initiatives within the
corridor, with a view to improving coordination (AgDevCo and InfraCo, 2010).
The Tanzanian agrocorridor also uses this delivery mechanism. The SAGCOT Centre was
created in May 2011 as an independent institution with the functions of coordinating and
mobilizing investment and partnerships in the corridor; commissioning research; monitoring
and improving the business enabling environment; and conducting impact assessment of the
initiative over time (SAGCOT, n.d.; WEF, 2012; 2013). It concentrates these efforts in priority
agrobased clusters and value chains. One key aspect of the operation of the SAGCOT Centre
is to assist investors with start-up aspects, including site identification, company registration,
available incentives and social and environmental safeguards. The Centre plays a subsidiary role,
helping the members of the partnership to do their jobs in a more targeted and effective way.
The GMS programme does not have corridor centres as such. However, the programme
and, in particular, CASP II, places great emphasis on cross-border agriculture resource centres
and investment one-stop centres (i.e. centres for approving investment applications and
facilitating the approval of business licences and other permits) to use more effectively exist-
ing and future infrastructure through progress in areas related to investment promotion in
agriculture and the development of agro-industries in the corridors (ADB, 2007a).
figure 23
Tools to support brown and greenfield agribusiness developments in BAGC
Working
capital Working capital
facility to support
Information Small farm organizations increased production
Agri-centre and other services
Venture
capital “Social” venture capital
Contract Public
facility to promote
farming/ goods
outgrower and services pioneer investments
Public goods Medium-size Infrastructure

and services commercial farm Patient capital facility for
lease
agriculture-supporting
Other
investors infrastructure
Other Grant
providers
Smallholder Infrastructure
facility Service Company
Source: author’s elaboration based on information from www.beiracorridor.com.

BOX 15
Corridor financial facilities
The BAGC blueprint considered three types of financial facilities, as illustrated in Figure 23: a
working capital facility, a social venture capital facility and a patient capital facility.81 So far,
only the social venture facility has been put in place under the name of the Beira Catalytic
Fund (BCF). The fund was set up in 2010 with an initial endowment of US$20 million with
support from the governments of Mozambique, Norway, the Netherlands and the United
Kingdom.82 AgDevCo manages the fund.83 This facility invests “social” venture capital in
early-stage agribusiness projects, taking out many of the front-end costs and risks that deter
private investment in the corridor. More specifically, the fund makes debt and equity invest-
ments on attractive terms to support the capital structure in the development of both exist-
ing and greenfield agribusinesses (on-farm operations, value addition and services). It also
provides entrepreneurs with managerial and technical support through the full project devel-
opment cycle, from design to implementation (e.g. helping to secure access to land respon-
sibly), as seen in Figure 24. In particular, it helps to leverage domestic and foreign capital
in support of the business, including local credit facilities and guarantees, as well as patient
capital from the international community to fund irrigation and other last-mile infrastructure.
FIGURE 24
Support to entrepreneurs provided by the Beira Catalytic Fund
Identify Work with Feasibility study Develop Exit by sale

project with local communities (economic, financing to commercial
stakeholders and businesses to social and plan and build investors
participation secure land rights environmental) infrastructure
1 2 3 4 5
Source: author’s elaboration based on AgDevCo, 2012.
The venture capital provided is tied to the recipient’s commitment to supply affordable
goods, services and end-markets to smallholder farmers. Amounts invested by the BCF
are typically in the range US$50 000 to US$500 000 per business (AgDevCo, 2012). BCF
operates as a competitive,84 revolving facility85 that seeks to recover its capital and make a
financial return (in the range of 5–10 percent overall) where available from incoming com-
mercial investors.
81
See Glossary.
82
http://www.agdevco.com/userfiles/file/AgDevCo %20Brochure %20June %202013 %20low
%20res.pdf [last accessed July 2013].
83
http://www.agdevco.com [last accessed July 2013].
84
Calls for proposals are regularly published.
85
All returns are recycled into funding new agribusiness opportunities.
BOX 15 (Continued)
As of February 2013, BCF had invested over US$3 million in 12 projects, directly ben-
efiting over 10 000 smallholder farmers.86 The large majority of the supported projects
fund commercial and outgrower production of crops (e.g. citrus, banana, litchis and other
fruit, organic sugar, maize and seeds) and livestock (goat products and broiler chickens)
(AgDevCo, 2012). The portfolio of the BCF is expected to reach approximately 25 projects
in a way that optimizes the achievement of direct impact at scale for smallholders while at
the same time recognizes the need to build agribusinesses across the extended value chain
(DFID, 2013). BCF’s performance is measured in terms of the income and capital generated
from the facility, as well as the business turnover, profit and formal jobs generated by the
fund portfolio (i.e. investee businesses) (ibid.).
Over time, other finance and insurance mechanisms are expected to complement this
facility. Examples of these mechanisms are working capital and patient capital facilities, and
weather-index insurance products for agriculture. An example of the latter type of tool is a
pilot index-based weather microinsurance product for maize, soybeans and sesame farmers
in the Chimoio region of Manica province, recently launched by BAGCI, in partnership with
AgDevCo and a local agricultural training college, Instituto Superior Politécnico de Manica
(ISPM), a technical university.87
The Smallholder Support Facility is a matching-grant facility88 managed by the BAGC
Partnership (see Chapter 7) that finances the provision of public goods and services89 to
smallholder farmers in the framework of a wide range of sustainable and replicable initia-
tives geared to integrating smallholder farmers into markets. These initiatives can be divided
into two main categories: private sector-driven outgrower and contract farming schemes in
priority value chains, and innovative models for supplying agricultural support services (e.g.
technology development and transfer, farmer organization, training and credit) to small-
scale producers.
Such grants are extended to up to US$100 000 per annum, for a maximum of two years.
Eligible applicants are farmers’ organizations, private firms, research institutions and NGOs
that are able to demonstrate that a “one-off” investment can result in a sustainable increase
in smallholder income, without the need for an ongoing subsidy. It is seen as a “smart
subsidy”90 to support the non-commercial components of smallholder support programmes
and induce earlier adoption of improved farming technologies. Examples include demon-
stration plots (e.g. Phoenix Seeds has established over 58 demonstration sites of maize and
86
http://www.agdevco.com/userfiles/file/BAGC %20press %20release_photosv3.pdf [last accessed
July 2013].
87
http://seedinvestors.blogspot.com.es/2012/12/beira-agricultural-growth-corridor-bagc.html [last
accessed July 2013]
88
See Glossary.
89
See Glossary.
90
See Glossary.
BOX 15 (Continued)
soya in the corridor); extension and training programmes (e.g. the establishment of ISPM’s
agricultural mechanization centre to provide short-term courses to tractor and machinery
operators); capacity building for farmers’ organizations; and last-mile infrastructure to serve
smallholder farmers, and particularly irrigation (e.g. RDI’s “hub and spoke” irrigation scheme
for avocados) (DFID, 2013).
As in the case of the Beira Corridor, the SAGCOT CTF is the mechanism by which sub-
projects are appraised and implemented in the corridor. The CTF has two windows. The first
is a Matching Grant Facility (MGF) for established commercial agribusinesses working with
smallholder farmers to build or extend competitive supply chains in a way that generates
income and creates employment for smallholders. The second is a Social Venture Capital
Fund (SVCF) to encourage the development and expansion of smaller and younger agri-
business firms (provided with start-up finance), also linked to smallholders (Government of
Tanzania, 2012). The CTF is expected to be at least US$50 million in size, although proposed
contributions are much higher: US$73.75 million (see breakdown of this figure in Table 31).
The CTF counts on financial backing from the Tanzanian Government and development
partners (DFID, 2012).
TABLE 31
Estimated contributions to the SAGCOT Catalytic Trust Fund
SAGCOT Catalytic Trust Fund
Matching Grant Facility World Bank US$40-45 million
Social Venture Capital Fund Government of the United US$1 million.

Republic of Tanzania
USAID US$12.5 million
DFID £10 m ~US$15.25 million
Total US$68.75–73.75 million
Source: DFID, 2012; USAID, 2012.
Alternatively or coincidently, these soft interventions can be designed at the value

chain level or, in other words, agricultural corridor-bound programmes can concen-
trate investment on a value chain or selection of agricultural value chains within a
corridor. Farooki (2012) notes the policy need to align infrastructure spending with
development needs, for example, around agrifood chains. The rationale for working
at this level is that the selection of value chains that stand out as strategically impor-
tant avoids spreading out limited resources. This option also provides a framework
for attaining better results by launching value-chain-bound actions, such as improv-
ing supply chain management; creating a database of inputs and services providers for
the value chain; engineering value-chain finance schemes; and launching value-chain-
wide partnerships to coordinate collective efforts to define and implement a roadmap
for the value chain. Successful value-chain interventions are characterized by the
presence of interrelated elements such as active links for farmers to markets, support
to farmer aggregation and broad-based access to finance. Given the importance of
value-chain targeting in corridor programmes, this issue is studied in section 6.6.
Another option is to support the development of agrobased clusters by selecting
areas with potential for improving economies of scale and reducing transaction costs
for the acquisition of inputs and services specific to the agribusiness activities that are
to be promoted, such as agricultural inputs, machinery, or logistics-related services
(UNCTAD, 2004; 2008; 2009b). This strategy favours the appearance and clustering
of service providers, wholesalers, retailers, exporters and other agricultural traders,
and their associations (World Bank, 2009b). Clustering efforts are often coupled
with the promotion of SEZs and agro-industrial parks along the corridor, according
to the advantages of the specific region. The objective is to generate a diversified
agro-industrial base, in the sense of covering a wide range of agroprocessing activi-
ties (notably transitioning towards higher-value processed commodities), but also in
terms of mixing small-, medium- and large-scale agroprocessing companies.
BAGCI is one of the corridor programmes that promotes the concentration of
agricultural activity in selected clusters or locations where processors, agricultural
support service providers (e.g. extension and finance), specialized suppliers and
associated institutions are also present. SAGCOT shares the clustering approach of
the Beira model, as described in Box 16.
In Indonesia, the development of growth centres on the establishment of clusters
and SEZs is one of the three MP3EI pillars. The location of agrobased clusters and
SEZs responds to the logic of maximizing the efficiency of agricultural crop move-
ment patterns to processing zones and ports (CMEA, 2011). The Indonesian mas-
terplan foresees a sequencing of agrobased cluster development in support of the
six economic corridors in three phases: 2011–2014, 2015–2019 and 2020–2030. The
nature of the interventions outlined in each phase depends on the level of perfor-
mance and existing critical mass of firms and supporting/connective infrastructure
in each corridor. In particular, the type and size of infrastructure improvements are
dictated by the economic activities carried out in the clusters.
These SEZs are multisectoral platforms (agriculture and other sectors) linked
to agricultural clusters and plantation nodes to stimulate value addition in the
corridors (ibid.). One example of agribusiness SEZs is Sei Mangke in the northern
part of the Sumatra Corridor. This SEZ has been earmarked as the centre for palm
oil-based industries (Presidential Decree 32/2012). The public sector has made
commitments to fund infrastructure developments to improve the connectivity of
the SEZ – primarily a 30-km railway line and the development of the nearby ports
of Dumai and Belawan. The private sector reacted positively to this initiative: many
multinational companies submitted plans to the tune of US$1 billion to establish
themselves within the SEZ. However, land acquisition issues were encountered
because of the refusal of the head of the district or bupati, empowered under
regional autonomy laws, to approve the land transfer.91 This is a reflection of the
91
http://www.accessmylibrary.com/article-1G1-301373032/mp3ei-infrastructure-projects-flounder.
html [last accessed July 2013].
BOX 16
Clustering in SAGCOT
SAGCOT has planned to focus initially on six agrobased clusters. These clusters have been
selected on the basis of the presence of large commercial farms, land availability, transport
and productive infrastructure, along with the potential for profitable groupings of farming
and processing to emerge over time. Building on existing operations and planned invest-
ments, these clusters are intended to bring together nucleus farms and outgrower schemes,
irrigated block farming operations, processing and storage facilities, transport and logistics
hubs, agricultural research stations and related service providers (SAGCOT, 2011).
Each cluster requires investments along the entire agricultural value chain, and particu-
larly those needed to improve last-mile infrastructure to farms and local communities. Some
investments are public goods, for example rural infrastructure, and as such will be provided
by the GoT and its development partners – US$1.3 billion according to the SAGCOT blue-
print. Others, with potential to generate financial returns will likely come from the private
sector – estimated at US$2.1 billion – such as professionally managed irrigated farm blocks
(SAGCOT, 2010; 2011).
Six priority sites have been selected, communities consulted, and environmental and
social impact assessments performed. Firms interested in investing in the clusters can obtain
land leases through the National Land Allocation Committee. Land leases are bid out to
investors ranked according to scoring criteria, which included the extent of outgrower sup-
port, value addition, community integration and protection of natural resources.
These clusters have been divided into three categories depending on the relative ease or
difficulty involved in developing agribusiness ventures. Accordingly, “Type 1” clusters incor-
porate most of the “quick win” projects, where significant development of medium- and
large-scale commercial farming, public irrigation schemes and backbone infrastructure are
already in place. Examples of Type 1 clusters are the Ihemi (Figure 25) and Kilombero clusters.
“Type 2” and “Type 3” require further investment in backbone infrastructure and careful
assessment of social and environmental impacts.
The initial focus on Type 1 clusters is critical to establish the momentum needed for SAG-
COT’s long-term success. For example, in the Ihemi and Kilombero clusters, over a dozen new
or expanded nucleus farms can be established in the first five years – in livestock, sugar, rice
and other cereals, and high-value horticulture – all with associated outgrower/service block
schemes to extend the benefits to smallholder farmers in the vicinity.
Agribusiness SEZs will also be deployed along key locations of SAGCOT. These SEZs will
give preferential treatment to all agricultural production businesses, including – in addition
to agroprocessing – distribution of agricultural inputs, manufacturing and hiring of agroma-
chinery, and packing and transportation of agricultural products (OECD, 2013).
lack of coordination among line ministries, agencies and local governments, which
may hinder the implementation of MP3EI.
Most corridor models opt for a combination of all the above entry points. For
instance, the agricultural plan of the GMS programme (CASP II) underscores that
BOX 16 (Continued)
FIGURE 25
Ihemi: example of an agricultural cluster in the SAGCOT corridor
Mpwapwa
District
Kilosa
Ruaha District
National
Park
Kiwere Nyanzwa
dam dam
Asas Dairy Farms
Source: SAGCOT, National Milling

Iringa 2011. Iringa
District
Corporation Mill
Mtanga Farm
Kisolanza
Horticulture
Project Kisolanza
Mufindi Kilombero
District District
Sao Hill Mafinga Kilombero Rice Plantation

Cattle
Ranch
Mufindi Tea Merera Plantation
Stone Valley Tea Kihansi

dam
Unilever Tea
Main road Mixed farm Market

Company Research station Dam
Source: author’s elaboration (UN Map No. 4045 Rev. 7, November 2011,
Department of Field Support - Cartographic Section).
building regional competitiveness requires the promotion of pro-poor agricultural

value chains, agrobased clusters and SEZs, and cross-border contract farming.
Thematic coverage. The range of topics covered by the different corridors varies
greatly. However, seven broad clusters of soft agrobound interventions used to
develop agrocorridors, either individually or concomitantly, can be individualized.
These are the following:

1. Improved behind-the-border policies and regulatory systems. Policy research
and dialogue to provide an enabling environment for private investments in
agribusiness are an important part of many corridor programmes. Broadly

speaking, policy areas of interest to agrobased corridors are those dealing with
agricultural and agro-industrial development, trade, food security, the adoption
of climate friendly practices, territorial planning and SME-friendly policies.
Specifically, there are seven policy topics that appear recurrently in this study.
Public engagement with the private sector. Agrocorridor programmes
require the active engagement of private agents such as farmers and their
associations (Kaarhus and Woodhouse, 2012), SMEs and large domestic
and multinational agribusiness companies. Agricultural corridor developers
may also want to engage private companies already present in the corridor
but working in other sectors such as oil and mining (as in the case of the
Peruvian corridors documented in later chapters), which are starting to
show interest in becoming major investors in the agribusiness sector. If
governed and regulated effectively, agribusiness PPPs may bring increased
production, employment generation, increased revenues and incomes, as
well as increased tax revenues. However, a supportive legal framework is
essential to do this. As a result, many of the corridor programmes studied
have begun to improve their legal, regulatory and policy framework to make
it more conducive to public-private collaboration, including specific PPP
legislation. For example, SAGCOT benefits from recent enhancements in the
Tanzanian regulatory framework to encourage private participation across
infrastructure sectors. The new legal instruments (PPP Act 2010, the PPP
Regulations 2011 and the Public Procurement Act 2011) are accompanied by
the efforts of the country’s two PPP units: a PPP Coordination Unit, placed
under the Tanzania Investment Centre (TIC) and tasked with promotion
and attraction of PPP investors; and a PPP Finance Unit, placed under the
Ministry of Finance in order to ascertain the affordability, fiscal consequences
and value for money of proposed PPP projects (OECD, 2013).
Land policy. Most corridor programmes have engaged in policy dialogue
to improve land use and tenure agreements. For example, the PRA Project
stimulated a secure land titling initiative, SAGCOT seeks to promote
equitable land-lease systems through regional land banks, and BAGCI is
working towards a land policy that makes land accessible to investors in a
way that is agreeable to local governments and communities.
Enhancement of the legal, regulatory and policy framework that enables
contract farming. Corridor programmes have embarked upon two types of
actions to promote contract farming: initiatives to debottleneck regulations
and procedures that made the implementation of contract farming and
outgrower arrangements difficult; and policy interventions geared towards
fostering more equitable agreements, such as the “2+3” policy in the Lao
People’s Democratic Republic (ADB, 2011d).
Investment promotion policies, in particular those necessary to catalyse
investment in specific SEZs and agrobased clusters so that they become trade
and service hubs of the corridors.
Trade reforms. Dialogue has been extremely active to remove restrictive
agricultural trade policies (such as export bans on maize and rice and the
regulatory restrictions on trade imposed by some crop boards affecting
SAGCOT), and facilitate the import of seeds, other agricultural inputs

and machinery, thanks to simplified import procedures and light taxation
(OECD, 2013).
Improvement and enforcement of standards, such as food safety and
traceability standards, organic, and sanitary and phytosanitary standards
(SPS). Cases in point are the PRA Project’s policy dialogue on SPS and
BAGCI’s work regarding fruit fly regulations.
Specific policies conducive to the development of prioritized value
chains such as biofuel policies (GMS and MP3EI) and certifiable forest
concession development (PRA), which is essential to develop the forest
products value chain.
Most corridors have taken the approach of addressing issues of policy and creating an
enabling environment, as these issues arise in the course of programme implementa-
tion. For example, the dialogue between the PRA Project and the GoP led to stream-
lining and strengthening the national policies for forest concessions and food safety
standards. An alternative to this approach is to address multiple agricultural policies
through a coordinated set of actions. Mozambique, the United Republic of Tanzania
and other Grow Africa countries participating in G8’s New Alliance for Food Security
and Nutrition Country Cooperation Frameworks have made upfront commitments
to improve policy and create an enabling environment for agribusiness development as
part of a joint agreement with development partners and donors (WEF, 2013).
2. Non-financial BDS to develop potential business opportunities in the agri-
cultural sector. The provision of non-financial BDS is key to improving the
corridor’s domestic sales and exports, mobilizing investments and generating
employment in the corridor. These services include: brokering of market link-
ages and promotion of contract farming in the interior areas of corridor coun-
tries; investment promotion; SME-support services; information services; and
other technical and entrepreneurial assistance as required. More specifically,
these services include the following:
Brokering of advantageous market linkages and promotion of contract
farming and outgrower arrangements. This issue is the cornerstone of
almost all the corridors analysed. However, they have approached the
topic from various angles and hence have arrived at different strategies. For
example, one of the main functions of the PRA ESCs is to act as brokers,
advisors and moral guarantors of contract farming deals between buyers
and local farmers. Other corridors take a less direct but equally important
engagement in contract farming via other means of promotion, such as
innovative financial models for offering incentives and support services
to agribusiness farmers and producer organizations engaged in contract
farming and outgrower deals, as found in BAGCI and SAGCOT; facilitating
information; and offering incentives, among other mechanisms.
Investment promotion. Agricultural corridors are means to reduce critical
constraints that limit investments required to enhance the competitiveness
and inclusiveness of the agricultural and agro-industrial sectors, by providing,
inter alia, critical infrastructure (waterbound transport and railway and road
systems, including farm-to-market roads and provincial road networks to
increase mobility, accessibility and affordability of agricultural products)

and adopting measures to improve the territorial and sectoral investment
environment. Therefore, corridor developers need to: (i) analyse whether
the conditions required for policies and strategies promoting investment in
agribusiness to be effective are in place; (ii) characterize the coordination
requirements among local stakeholders, the private sector, government
bodies (including Ministries of Agriculture and Trade and Industry,
investment promotion agencies (IPAs) and local/regional government
units) and international institutions where applicable; and (iii) identify the
specific channels through which agricultural corridors can influence investor
decisions (SAGCOT, 2011; Milder et al., 2012).
Promotional and support measures targeting SMEs in corridor areas
by upgrading production standards, management and marketing, and
developing the link of SME production processes with existing large
enterprises. Corridors could reduce the size threshold and simplify the
application process when applying for incentives, and propose stronger
intellectual property rights assistance for SMEs. Clearer supply-side policies
for improving human resources and infrastructure in specific sectors eliciting
investment linkages could also be considered.
Corridor programmes, particularly through dedicated corridor centres, can
facilitate access to information critical for the development of agribusinesses,
such as market information, information about providers of inputs and
services and information on available financial and risk management
products. For example, a key function of the Peruvian and Indonesian
corridors is to facilitate farmers’ access to financial services via provision of
information and strategic partnerships.
Other technical and entrepreneurial assistance regarding production and
marketing extension services, entrepreneurial development and couching,
market research and intelligence, and advice on post-harvest handling and
value addition through agroprocessing, among other issues. In particular,
the introduction of innovative, efficient extension models is crucial for
agribusiness development in the corridor.
3. Financial and risk management tools. These include catalytic finance and
finance to promote market access and the provision of embedded services,
such as agricultural extension. The African corridor programmes studied have
rolled out dedicated financial facilities to support greenfield investments by
companies with socially responsible business models, as well as innovative
models for delivering public goods and services to organized smallholder
farmers located in the corridor. These corridors have also devised risk man-
agement tools, such as loan guarantees and currency risk instruments to help
leverage capital from national banks into agribusiness firms operating in the
corridor. Another option they have explored is to pilot index-based weather
microinsurance for selected corridor crops, as done by BAGCI (Box 15).
Another example pertains to the collaboration in SAGCOT and the Sulawesi
Corridor in Indonesia between corridor managers and local banks to develop
warehouse receipts systems for key corridor crops.
4. Environmental management and emergency response for agricultural and

food crises and others. This category encompasses actions to foster green
growth via, for example, the study and promotion of sustainable agricultural
practices, avoided deforestation and efficient water management, as defined in
the SAGCOT greenprint (Milder et al., 2012); the good environmental prac-
tices foreseen in the MP3EI, in alignment with the Indonesian Action Plan
for Reducing Greenhouse Gas (GHG) emissions (Strategic Asia, 2012); and
improved emergency response mechanisms for agricultural and food crises, as
in the case of the GMS corridor programme.
5. Agriculture science and technology development and promotion of R&D in
appropriate technologies to support industrial expansion and relocation are,
for example, important soft interventions undertaken as part of the GMS and
MP3EI programmes. The involvement of the private sector in R&D should be
encouraged. Another example that falls under this category is research under-
TABLE 32
Various types of plans for economic corridor development
Delivery Dedicated corridor centre ¾ ¾ ¾

mechanisms
Corridor financial facility ¾ ¾
Mainstreaming in national
¾ ¾ ¾
programmes and institutions
Entry points Individual firms and producer

¾ ¾ ¾ ¾
organizations
Value chains ¾ ¾ ¾ ¾ ¾
Agrobased clusters and SEZs ¾ ¾ ¾ ¾
Thematic Policy research and dialogue ¾ ¾ ¾ ¾ ¾

areas
Non-financial BDS
Market linkages and contract
¾ ¾ ¾ ¾
farming
Investment promotion ¾ ¾ ¾ ¾ ¾
Information systems ¾ ¾ ¾ ¾ ¾ ¾
Other BDS ¾
Financial facilities ¾ ¾
Environmental management and

¾ ¾ ¾ ¾
green growth
Agricultural science and

¾ ¾
technology
Human resources development ¾ ¾
Institutional strengthening and

¾ ¾ ¾ ¾
corridor governance

Note: ¾ core; ¾ secondary.
taken in the framework of corridor programmes on biofuel production and

climate change adaptation strategies.
6. Skills development in agricultural policy and extension, among other issues.
Again, the GMS and MP3EI programmes dedicate resources to develop
human resources and equip them with the skills necessary to increase the
competitiveness of specific value chains, as well as general agricultural issues.
7. Institutional strengthening, corridor governance and coordination. This cat-
egory refers to actions to strengthen and build the capacities of both corridor
institutions (corridor governing bodies, corridor centres, fund managers and
institutes, etc.) and national organizations that are relevant for the implemen-
tation of the corridor programmes, such as national institutions with a man-
date to ensure food safety and SPS, to foster investment in agriculture (Cham-
bers of Commerce in the case of GMS, and IPAs in BAGCI and SAGCOT).
In some cases, the corridor champion incorporates capacity-building activities
in the corridor programme with a view to empower national governments of
corridor countries to step up mobilization efforts to meet financing needs,
by accessing specialized global funds and other opportunities offered by the
international community and partners in the private sector.
Figure 26 summarizes the information presented in this section regarding soft

interventions for widening national corridors by fostering the development of
the agricultural sector. It refers to the delivery mechanisms, entry points and
thematic coverage of the soft interventions undertaken in the national corridor
experiences studied.
6.5 CORRIDOR COMPONENTS DEALING WITH REGIONAL INTEGRATION:

FROM NATIONAL TO REGIONAL CORRIDORS
In the GMS and CAREC regional corridor programmes the majority of interven-
tions fall under Zones III and IV, given that their emphasis is on regional coordina-
tion and joint regional planning and implementation.
Regional corridors fulfil a unique role in the promotion of intraregional trade
and investments and, by doing so, they increase regional competitiveness and pro-
ductivity. The regionalization of corridors involves enhancing physical connectivity
across nations by diminishing transportation costs and cross-border transactions.
The above implies not only improving the infrastructure hardware (e.g. regional
highways and infrastructure at border crossing points) but also facilitating cross-
border transport and custom procedures and addressing other important software
concerns, such as road safety and the incorporation of climate concerns in road
upgrading and maintenance. For example, the GMS corridor programme implements
a Cross-Border Transport Agreement (CBTA) that seeks to put in place simplified
and harmonized customs procedures (ADB, 2008b). Developing and strengthening
logistics companies, upgrading vehicles and standardizing procedures in the corridor
may also enhance the regionality of narrow corridors. These are the type of inter-
ventions implemented in Zone III. The private sector (notably logistics firms) has a
critical role to play in Zone III development, as the lead stakeholder in enhancing
transport and trade facilitation. In recognition of this, the GMS corridor programme
has supported the establishment and built the capacities of a regional association of
logistics companies in GMS countries. Clearly, a well-performing logistics sector can

reduce costs and intensify the flow of goods and services across the corridor.
From the point of view of institutional connectivity, a regional corridor
strengthens the competitiveness of agriculture and other selected sectors, thanks to
economies of scale generated by cross-border trade and investments and the provi-
sion of regional public goods associated with agricultural development and natural
resources management. One example is the GMS initiative for sharing agricultural/
market information across the regional corridors via public-private collaboration.
This initiative encompassed knowledge transfer activities on post-harvest (RETA
9036) and rice information technology (RETA 9047); and knowledge management
initiatives, such as operationalizing the Agriculture Information Network Service,
officially launched during the GMS Agriculture Ministers’ Meeting in April 2007.
Furthermore, regional corridors support the development of the private sector (e.g.
agribusiness firms and farmers’ organizations) through joint financial, technologi-
cal, production and other collaboration (ADB, 2011c; 2011e; 2012e; ADBI and EE,
2009; IaDB, 2011). An example of this is presented in Box 17. These interventions
are characteristics of Zone IV.
Zone IV marks the emergence of broad regional corridors in which cross-border
initiatives are coordinated among the corridor countries, i.e. interventions to widen
the corridor are undertaken beyond the scope of a country’s own territory. A case
in point is a corridor initiative in which agricultural investments are coordinated
between two or more countries (Carciofi, 2012), for instance, cross-border SEZs,
agrobased parks, clusters and other cross-border investments. In the GMS corridor
programme, the responsibility of fostering cross-border investments is the mandate
of member countries, supported by the GMS Working Group on Investment, which
guides the implementation of SFA-TFI, in collaboration with the GMS ECF and
the Business Forum. A representative case of cross-border investments along GMS
corridors is the large long-term investment92 of Thailand’s biggest producer and
exporter of sugar, Mitr Phol Sugar Corp., in Savannakhet, Lao People’s Democratic
Republic, to serve the Laotian market and export to China and the Republic of
Korea (ADB, 2008c; Bafoil et al., n.d.).
Cross-border agricultural clusters and SEZs have become prominent fixtures of
regional development in the GMS, as determined by the overall strategy plan to
foster the clustering of the industries along the corridors (ADB, 2010a). Many of
these growth areas are located in or connected to borders between Thailand and the
remaining GM5 countries (ADB, 2012f). They deal with both cash crops (e.g. maize,
soybeans, green beans, peanuts, potatoes, cashew nuts and eucalyptus) and biofuel
crops (e.g. oil palm and sugar cane). Private firms participate actively, especially in
ensuring reliable input supplies (e.g. agricultural products) by relocating close to
the border or entering into contract farming to guarantee supply availability (ibid.).
92
US$22.5 million in a 40-year concession.
BOX 17
Engaging the private sector in regional corridor programmes:
the case of GMS
To ensure that private sector perspectives were well reflected in the deliberations of all the
GMS sector fora and working groups, the GMS programme launched the GMS Business
Forum in 2000, with support from ADB and the United Nations Economic and Social Com-
mission for Asia and the Pacific (UN ESCAP). This forum brings together the business com-
munity throughout the subregion via the national Chambers of Commerce and Industry.93
It provides a channel for public-private dialogue on policy issues; promotes networking
among enterprises, business chambers and IPAs in the context of GMS-related activities;
fosters the expansion of PPPs for infrastructure development and encourages the develop-
ment of SMEs; and plays a vital role in the capacity building of the private sector and its
associations in the GMS.94 In particular, the forum supports the implementation of CASP
and CBTA, especially the development of business networking along the corridors and the
development of quality standards for services. For example, in 2010, the forum established
a private sector-led Trade and Transport Facilitation Task Force (TTF-TAF) to review the busi-
ness environment and facilitate the implementation of customs and transit systems in all
the corridors. In 2011, the forum set up a unified platform for trade, transport, and logistics
companies, called the GMS Freight Transport Association (FRETA) to support TTF-TAF and
work together with GMS governments.
A fairly recent development in the GMS programme governance is the establishment of an
umbrella structure at the corridors, known as the Economic Corridors Forum (ECF). This forum
is the main advocate and promoter of multisector coordination in the GMS corridors by rais-
ing awareness of needs and priorities, and increasing the involvement of local authorities and
private actors in corridor affairs (ADB, 2011a). The first ECF took place in Kunming, China,
in June 2008, followed by the ECF-2 in 2009, the ECF-3 in 2011 and the ECF-4 in 2012.95
These agricultural clusters now appear to be an overriding principle of the GMS

corridor programme, especially when the ASEAN-China Free Trade Area is taken
into account. The rationale behind this is that these clusters offer an opportunity
93
www.gmsbizforum.com [last accessed July 2013].
94
Ibid.
95
ECF-2, held in Phnom Penh, Cambodia in September 2009, “GMS Economic Corridors: Pathways
to an Integrated, Harmonious and Prosperous Subregion”, discussed and generally agreed with the
directions set forth in the corridor strategy and action plans. ECF-3, “Strengthening Pathways for
Sustained Progress in the GMS”, took place in Vientiane, Lao People’s Democratic Republic, in June
2011. ECF-4, “Towards Implementing the New GMS Strategic Framework (2012–2022): Expanding,
Widening, and Deepening Economic Corridors in the GMS”, which took place in Mandalay,
Myanmar in June 2012, sought to promote strong country and sector ownership further, as a critical
requirement for effective delivery of an investment framework aligned with the development of
inclusive economic corridors in the GMS.
to apply agricultural trade facilitation initiatives (e.g. to pilot the proposed inte-
grated package for automating the licence and permit system) and to expand growth
through the creation and expansion of industrial estates, one-stop services centres,
border SEZs, and other infrastructure and facilities (ibid.).
Some examples of cross-border SEZs include those established along the new
corridor roads linking Viet Nam with Cambodia and the Lao People’s Democratic
Republic (Table 33). One example on the Lao PDR-Viet Nam border is the Lao Bao
Special Economic and Commercial Area, which includes coffee and fruit processing
(canned and bottled juice beverages) (ADB, 2010c). Along the East-West Economic
Corridor (EWEC), agro-industry is growing fast in several segments. These include
the Nghe An Economic Zone, Viet Nam, with major new private and foreign invest-
ments in beer, sugar and milk factories over the last few years;96 the Hoi An and Chu
Lai Open Economic Zone in Tam Ky, Viet Nam, with the presence of some agrifood
processing firms such as PepsiCo (beverages) and Uni-President China food produc-
tion company (Ishida, 2012). Nonetheless, given the rapid development in Southeast
Asia, SEZ and cluster initiatives could be applied more widely (Menon, 2009).
Nonetheless, Bafoil et al. (n.d.) maintain that GMS SEZs (based on the analysis
of three SEZs in Cambodia and the Lao People’s Democratic Republic) have failed
to harmonize incentives, cross-border rules, cross-border cooperation objectives,
regional governance and multilevel structures of governance. They do not present
social, economic, political or cultural structures across the region nor is the subsys-
tem conducive to regional integration from infrastructure-driven regional integra-
TABLE 33
SEZs proposed at border areas in the framework of the GMS corridor programme
SEZs located on the borders of the Name of SEZ
countries below
Cambodia and Viet Nam Manhattan, Bavet
Cambodia and Thailand Poipet
Cambodia and Thailand Koh Kong-Trat
Lao PDR and Viet Nam Denh Savanh-Lao Bao
Lao PDR and Thailand Savan-Seno, Savannakhet-Mukdahan
Lao PDR and Thailand Thanaleng-Nong Khai
Lao PDR and Thailand Huai Xai-Chiang Khong
Myanmar and Thailand Myawaddy-Mae Sot
Myanmar and Thailand Tachileik-Mae Sai
Source: Ishida, 2009.
96
These include a sugar processing joint venture with the United Kingdom-based multinational Tate
& Lyle, the Sai Gon beer factory in Nam Dan, the Hanoi beer factory in Nghi Loc and the TH True
Milk fresh milk processing plant in Nghia Dan.
tion. There is also a gap between regional market integration; the SEZ cases do not
reflect any horizontal relations between them, not even at a national level. To sum
up, there are systemic problems in the approach to hard and soft aspects of trade
facilitation towards regional integration.
Another key intervention in Zone IV is the promotion of cross-border contract
farming, for instance, through the operation of cross-border agriculture resource
centres and the passing of enabling legislation. Consequently, Chinese and Thai
firms are increasingly engaging in cross-border contract farming with farmers from
Cambodia, the Lao People’s Democratic Republic, Myanmar and Viet Nam. Thai-
land has been actively pursuing contract farming as a tool for regional economic
integration, building upon the Declaration of the 2005 ACMECS Summit. In the
declaration, Thailand pledged tariff-free imports of all approved agricultural prod-
ucts produced under contract farming in ACMECS (GMS5) countries.
The declaration included an agreement to accelerate cooperation on contract
farming, including the conclusion of MOUs on the topic and the establishment of
joint bilateral working committees. For instance, in keeping with this agreement, the
Governments of Thailand and Myanmar signed an MOU to facilitate Thai invest-
ments in crops for which local demand is not met in Thailand. Myanmar provides
Thai agribusiness firms with access to 7 million ha of arable land. In return, the Thai
firms provide seeds, technology and equipment for the farmers and purchase all the
products from contract farms (ADBI, 2008a).
Thailand also has bilateral projects with the Lao People’s Democratic Republic,
especially through the Sister Cities project under ACMECS. The Laotian Govern-
ment has taken a proactive stance as well, with regard to cross-border contract
farming, by promoting the so-called “2+3” policy to ensure that all the parties
involved obtain benefits. This policy implies that under a contract farming arrange-
ment, producers contribute land and labour (two elements), while investors provide
inputs, technical advice and access to markets (three elements) (Fullbrook, 2007).
This arrangement takes advantage of lower labour costs and land availability on one
side of the border, and more advanced entrepreneurship and technology, and greater
availability of capital and management skills, on the other. Buyers sometimes offer
more than the three factors mentioned; for instance, Chinese agricultural scientists
have been able to develop a special variety of rubber tree suited to conditions in
northern Lao PDR. Several examples can be found of the 2+3 business model in the
Laotian section of GMS corridors.
Table 34 lists subsectors and value chains in GMS corridors where cross-border
contract farming agreements abound.
Another important area of regional corridor cooperation is the improvement of
regional regulatory systems for agricultural and food products, and the harmoniza-
tion of the different national systems, notably the following.
Modernize sanitary and phytosanitary (SPS) measures to facilitate trade in
agricultural and food products in the CAREC corridors (ADB, 2012e); and
improve SPS handling in GMS for Cambodia, the Lao People’s Democratic
Republic and Viet Nam.97
97
www.adb.org
TABLE 34
Contract farming experiences in GMS agrifood chains
Corridor Participating countries Subsectors and value chains
NSEC Lao PDR, Myanmar, Rubber, tea and maize (northern Lao PDR/China)
China and Thailand
Cassava and sugar (Guangxi/Viet Nam)
Sugar cane, maize, watermelons, bananas, cabbages, tamarind
and other horticultural products (northern Lao PDR/Thailand)
Forest products
Agricultural machinery and equipment
Biofuel production
-- Biofuel from cassava, jatropha and sugar cane (China)
-- Biodiesel from jatropha and oil palm (Thailand)
-- Bioethanol from maize, cassava and sweet sorghum
(Myanmar)
EWEC Lao PDR, Myanmar, Beer, sugar, beverages and milk production (Viet Nam)
Thailand and Viet Nam
Pinewood oil, beer and sugar (Lao PDR)
Rice (Thailand and Viet Nam)
Organic food
SEC Cambodia, Thailand Maize (Cambodia and Thailand)

and Viet Nam
Ethanol from cassava and sugar cane
Rubber
Rice
Pulses
Fruit and vegetables (e.g. durian, pepper)
Sources: ADB (2007a; 2009; 2010b; 2010c); ADBI (2008a; 2008b); Nguyen and Ha-Duong, 2009; Malik et al., 2009;
Shepley et al., 2009; USAID, 2009; Manorom et al., 2010.
Harmonize food safety standards and the development of regional food

traceability systems in the GMS.
Introduce pesticide regulations and a partnership for pesticide management,
notably the elimination of persistent organic pollutants in agricultural production
in Central Asia (ADB, 2012e).
Promote voluntary standards (e.g. organic and fairtrade certified products),
ecolabelling and pro-poor certification systems in the GMS.
The multisectoral approach of the regional corridors studied highlights the

importance of deploying activities to improve the points of convergence of agri-
culture with other sectors, such as natural resources, trade facilitation and others,
as exemplified in Figure 26. This figure gives some examples of cross-sectoral
activities that are important for achieving sustainable green agricultural growth in
regional corridors.
figure 26
Examples of corridor soft-side interventions aiming to promote regional integration
Facilitation of agricultural trade

Single-window facilities for one-stop customs clearance
Environmental management
• Regional cooperation in research and development
on climate friendly agriculture
• Climate change mitigation and adaptation in agriculture
• Flood and drought management
Agriculture Development of human resources

• Skills development programmes in agricultural policy and extension
• Cooperation in agricultural research and development
Coordination mechanisms
• Development of corridor coordination institution and mechanisms
involving public and private stakeholders and other corridor supporters
• Creation of corridor institutes to create and share knowledge on key issues
Logistics
• Promotion and deregulation of cross-border logistics investments
• Corridor-based associations of logistics firms
Source: author’s elaboration based on ADB, 2007a.
6.6 SPECIALIZATION IN VALUE CHAINS AND MARKET ORIENTATION

Each agrocorridor specializes in different commodities, depending on their core
competencies and natural resources allotment. However, there are three broad cat-
egories of agricultural products that appear consistently in the experiences analysed:
biofuel crops, cereals and other food security crops and high-value commercial
crops (e.g. animal and fish products, forest products and fruit and vegetables).
In all the corridor cases there was evidence of biofuel production, either ethanol
from sugar cane, cassava, sweet sorghum and maize, or biodiesel from palm oil,
jatropha and catfish oil (Box 18). A summary of this information is presented in
Table 35. Biofuel production from palm oil and sugar cane is widespread across the
corridors examined.
Biofuel chains are gaining importance in the GMS partly because of the grow-
ing demand for energy, notably bioenergy, at global and regional levels. Under a
business-as-usual scenario over the next decade, energy consumption in the GMS
is likely to increase at a rate of 7 to 16 percent per annum, thereby substantially
surpassing economic growth rates (ADB, 2007a; 2009). The transport sector, in
particular, will likely augment its fuel consumption manifold if the current trends
in vehicle sales and registration persist (ADB, 2007a). Furthermore, some GMS
countries, notably China, Thailand and Viet Nam, have already established national
biofuel programmes encompassing enabling policies, targets and incentives (ibid.).
BOX 18
Corridor specialization in agricultural value chains
Each economic corridor has different factor endowments, strengths, constraints and com-
plementarities. Therefore, each corridor tries to develop economic activities for which they
enjoy competitive advantages. This also applies to agriculture and its different subsectors
and value chains.
The GMS corridors, for example, are all different. NSEC provides good opportunities for
investing in agriculture and agro-industry, including food processing, non-food agrobased
industries (e.g. forest products and bioenergy industries), agricultural machinery and equip-
ment, and cottage industries linked to community tourism (ADB, 2010b). SEC offers good
potential for investing in the production and processing of commercial and industrial food
crops, as well as ethanol production from cassava and sugar cane (ADB, 2010c). Similarly,
EWEC prioritizes support to agriculture-based processing activities through cross-border con-
tract farming in Savannakhet (Lao PDR), and rice processing in Viet Nam and Thailand. More
important, EWEC tries to position itself as the organic belt of the GMS.
Even within a corridor, each route tends to specialize in certain sectors in order to make
the most of underlying comparative advantages and complementarities. For instance, in
NSEC, the central subcorridor focuses on agro-industry and other labour-intensive industries;
while the eastern subcorridor capitalizes on primary agriculture, agro-industry, trade and
logistics (ADB, 2010c). Similarly, each GMS corridor naturally favours the development of dif-
ferent agricultural value chains. For instance, the central subcorridor of SEC is well endowed
for developing industrial crop value chains such as rubber and sugar cane, and some com-
mercial crops (particularly cassava, rice and pulses). SEC’s southern coastal subcorridor, on
the other hand, has advantages for the development of rice, fisheries, renewable energy
production (e.g. biodiesel from palm oil and ethanol from sugar cane), durian, pepper and
other fruit and vegetables (ibid.).
Two factors in particular influence the specialization of GMS corridors in one agricultural
value chain/subsector or another. The first factor is the expansion of biofuel production across
the GMS area, notably in China, Thailand and Viet Nam and, more recently, in Myanmar.
The second refers to the promotion of contract farming for commercial and industrial crops
across the subregion, and particularly by Sino-Thai investors in border areas of Cambodia,
Lao PDR and Viet Nam.
Supply-side factors (available farm land and workforce, favourable soil and
weather conditions) are also conducive to the surge of biofuel production in the
GMS corridors. The production of both ethanol and biodiesel98 could help farmers
located in the corridors diversify their activities and earn additional income while
concomitantly offsetting projected demand using energy produced locally and with
fewer environmental impacts (Malik et al., 2009).
98
See Glossary.
TABLE 35
Corridor specialization in biofuel crops
Ethanol Ethanol Ethanol Biodiesel Palm oil/ Soybeans/ Sugar/
from from from from biodiesel biodiesel ethanol
cassava maize sorghum jatropha
BAGCI ¾
GMS ¾ ¾ ¾ ¾ ¾ ¾ ¾
MP3EI ¾
PRA ¾
SAGCOT ¾ ¾
Source: author’s elaboration, based on www.adb.org; www.proyectopra.com; AgDevCo and InfraCo, 2010;
Biofuel production is uneven across the GMS corridors, in terms of the crops
used, production levels and scale of operations. The two Chinese provinces
belonging to the eastern branch of NSEC, Yunnan and Guangxi, are important
producers of bioethanol. In Guangxi, the state-run COFCO – China’s largest
grain trader and processor – operates a cassava-based ethanol plant (one of
China’s five largest bioethanol plants) that produces 200 000 tonnes per year,
plus 30 000 tonnes per year of second-generation biofuel99 from cassava residues
and stalks (ADB, 2009; Malik et al., 2009). Furthermore, a subsidiary of the state
energy company, the China National Offshore Oil Corporation (CNOOC),
is planning to set up first- and second-generation facilities in the province of
Guangxi to process 180 000 tonnes of ethanol per year from cassava. Yunnan has
specialized in jatropha biodiesel production; in fact, it has been designated as the
demonstration province to roll out the national jatropha programme (Malik et
al., 2009). The provincial government has proposed 14 biodiesel refining plants
with an aggregated annual production capacity of 3.2 million tonnes of biodiesel.
Additionally, Yunnan and Guangxi have great potential for producing bioethanol
from sugar cane.
Viet Nam produces bioethanol from sugar cane, sweet sorghum and cassava, and
biodiesel from jatropha and catfish oil. Its estimated annual capacity is approxi-
mately 320 million litres of bioethanol from cassava and 53 million litres from sugar
cane (Nguyen and Ha-Duong, 2009). The Thai segment of the NSEC corridor
produces biodiesel from oil palm and jatropha in large- and small-scale operations,
respectively. In Myanmar, sugar cane is the main source of bioethanol followed by
maize, cassava and sweet sorghum; in contrast, biodiesel production (mainly from
jatropha) is still at the demonstration phase, in spite of the ambitious three-year
government plan (2006–2008) that attracted much interest initially but created some
land conflicts (ADB, 2007a).
99
See Glossary, under biofuel.
Likewise, the Beira Corridor bears witness to a significant interest in large-scale

investments along the sugar/ethanol value chain. Since 2007/08, private firms
investing mostly in sugar cane for ethanol (and jatropha) have been allocated over
80 000 ha (AgDevCo and InfraCo, 2010). However, just a small fraction of this area
has been put into production so far because of prevailing business and infrastruc-
ture constraints, which BAGCI plans to address. The selection of these crops is
not fortuitous, but has been inspired to a large extent by the resemblance that the
Beira Corridor bears with the Brazilian Cerrado, in terms of ecosystems and strong
regional markets (Ministry of Agriculture of Mozambique, 2010). The Cerrado
region has become a global source of soybeans, sugar and ethanol, among other
crops, and Beira has the potential and willingness to emulate the Brazilian success
story. Accordingly, one of the biofuel investments foreseen under BAGCI is that
of Principle Energy, a Mozambican project that agreed to invest US$400 million
towards producing sugar-cane ethanol on 14 000 ha in Dombe (Manica province) to
be exported through the port of Beira.100 Similarly, Mozambican Prio-Agricultura,
which is already farming oilseeds and cereals on 9 200 ha of land, has secured a
second plot of land with a total investment of US$48 million (ibid.).
Grains and roots are also consistently found as key crops promoted in the cor-
ridors studied because of their importance for food security, as noted in Table 36.
In the case of the GMS, these crops are mostly produced through contract farming
in one corridor country to tackle unmet demand in a neighbouring country also
connected to the corridor.
Fisheries, aquaculture and animal production are also given great importance in
the corridors studied in this report, as seen in Table 37. This is consistent with the
global trend to increase protein consumption from animal and fish sources.
The fruit and horticultural value chains also rank high in the list of value chains
promoted in the corridors appraised. Some crops are produced as part of cross-
border contract farming deals, as in the case of the GMS corridors. Further crops,
TABLE 36
Corridor specialization in grains and other crops key to ensuring food security
Cassava Maize Rice Sorghum Wheat
BAGCI ¾ ¾
GMS ¾ ¾ ¾ ¾
MP3EI ¾ ¾ ¾ ¾
PRA ¾
SAGCOT ¾ ¾ ¾ ¾ ¾
Source: author’s elaboration, based on www.adb.org; www.proyectopra.com; AgDevCo and InfraCo,

2010; SAGCOT, 2011; CMEA, 2011.
100
http://beiracorridor.com/ [last accessed July 2013].
TABLE 37
Corridor specialization in animal and fish protein production
Dairy products Fisheries/ Livestock Poultry
aquaculture
BAGCI ¾
GMS ¾
MP3EI ¾ ¾ ¾
PRA ¾ (trout) ¾ ¾
SAGCOT ¾ ¾ ¾ ¾

2010; SAGCOT, 2011; CMEA, 2011.
TABLE 38
Corridor specialization in fruit and vegetables
Artichokes Bananas Citrus Litchis Mangoes Misc. fruit Misc.
vegetables
BAGCI ¾ ¾ ¾ ¾ ¾
GMS ¾ ¾ ¾ ¾ ¾
(tamarind)
MP3EI ¾ ¾
PRA ¾ ¾ ¾
(proc. fruit) (proc. potatoes)
SAGCOT ¾ ¾

2010; SAGCOT, 2011; CMEA, 2011.
on the other hand, are cultivated for the export market, for example, artichokes and
other non-traditional export crops in the Peruvian corridors.
The penchant of the corridors reviewed for high-value agricultural products
goes beyond the production of biofuel, horticultural, animal and fisheries products.
Other high-value crops produced are detailed in Table 39.
A large fraction of these products are cultivated with the export market in mind.
In the case of GMS, there is particular emphasis on producing for the subregion, as
shown in the rising intraregional trade statistics.
The exception is CAREC. Given that agriculture is a second-tier area in the
CAREC corridor programme, efforts are ad hoc and highly focused, not sectoral
or even value-chain-wide. Therefore, there is no use talking about specialization in
these corridors. With regard to market orientation, the main destination markets for
agricultural production have traditionally been Europe for Central Asian countries
and eastern China (Xinjiang province) (ADB, 2012e). Partially because of this, there
TABLE 39
Corridor specialization in other high-value agricultural products
Proc. Cocoa Coffee Cut Forest Miscellaneous Rubber Tea
beans flowers products
BAGCI
GMS ¾ ¾
MP3EI ¾ ¾ ¾
PRA ¾ ¾ ¾ ¾ ¾ ¾
(certified) (bixin, tara)
SAGCOT ¾ ¾ ¾ ¾ ¾
Source: author’s elaboration, based on www.adb.org; www.proyectopra.com; AgDevCo and InfraCo, 2010;
is ample room for improving intra-CAREC agriculture trade, whose volume is far
less than that of interregional trade, possibly in a proportion of 1 to 15 (ibid.).
The PRA Project experience is also unique when it comes to value-chain target-
ing. In focusing on increasing sales by firms working in the corridors, the project
has in fact addressed value-chain issues through a great deal of firm-based work
(USAID, 2008a). It has encouraged businesses for over 400 products, with a large
preponderance of agricultural and food products. Rice, trout, palm oil, fruit, beans
and legumes, coffee, flowers and plants, certified wood and wooden flooring,
artichokes, tara (a small leguminous shrub whose subproducts are used in leather
manufacturing and in a number of food applications), cocoa, poultry, dairy products,
cotton and processed potatoes are among the most successful products supported,
listed in descending order in terms of contribution to new sales.101 This makes the
PRA Project primarily an agro-industrial programme, with the raw material coming
from the countryside and the processing taking place in intermediate cities belong-
ing to the same corridor as suppliers, but also in Lima and other large cities.
The PRA Project choice of working with clients, instead of preselected products,
sectors or industries, has operated as a natural selection process that has brought
to light products and market opportunities that otherwise would have been over-
looked. Examples of products that might likely have slipped under the radar in a
preselection exercise abound in the list of the Project’s top businesses: flowers, bixin
(a natural colourant for food and nutraceutical uses), tara, processed fruit, palm oil
and certified wood.
Thanks to fluid information channels, market expertise on a specific product
or value chain and the trust established with client connector firms attained by
a specific corridor and the Project’s central office could be easily transferred to
other corridors. For example, the experience of Huaylas in the cut flower export
business catalysed the development of similar business deals in the Huancayo and
101
http://www.proyectopramonitoreo.com [last accessed July 2013].
Huanuco corridors. Likewise, a trout experiment supported by the Junín ESC

was replicated in the Huancayo, Huancavelica and Puno corridors. The artichoke
processing initiated in Huaylas and Huancayo then extended to the Huancavelica
and Ayacucho corridors (USAID, 2005). Such spin-offs occurred sometimes via
the interest of a client firm to operate in new areas (such as trout). However, it was
mainly a demonstration effect, an eye-opening call to seize a business opportunity.
This phenomenon was highly unlikely to have occurred in a spontaneous manner
among geographically distant corridors without the knowledge exchange channels
existing among the corridors and through the central office in Lima.
The PRA Project often discovered business opportunities in new agricultural
value chains through the symbiotic relationship established with connector firms.
For instance, the Project helped an entrepreneur to introduce new varieties of
thornless artichokes for the European market, establish a processing plant in
Concepción, home to 5 000 people in the Mantaro Valley in the Central Andes, and
enter into contract farming with dozens of small local producers. A new market
opportunity was further spotted: the possibility of supplying processed jalapeño
chillies to a company in the United States of America. The Project helped its client
to identify farmers willing to cultivate the new crop in the corridor and organize
the value chain. The company now sources from over 200 artichoke and jalapeño
growers and hires more than 600 employees in its processing plant, 90 percent of
whom are women employed in their first formal job (USAID, 2008a; 2008b).
The PRA Project has made a particularly substantial impact on three value
chains: artichokes, trout and certified wood products. The artichoke value chain is
especially noteworthy. In the first phase, the Project convinced six artichoke pro-
cessing and exporting companies to start operating in the highlands (export-oriented
artichoke production in Peru started in the 1990s but only on the coast), and helped
them to adapt the artichoke cultivation package to the highlands’ edaphoclimatic
conditions, and link up with small-scale growers in the Mantaro Valley, Ancash,
Ayacucho and Cusco. A total of 740 ha of land was planted, for sales worth US$4.5
million, and export channels were developed in the United States of America and
the EU. Exporting companies provided growers with inputs and ensured produce
purchases. The Project facilitated the deals between growers and buying companies,
and provided field TA. These businesses created many positive externalities in the
corridors: new businesses emerged, inter alia, input suppliers (fertilizers, pesticides
and tools), transport and logistics services from and to remote growing areas, field
supervising services, and glass jar suppliers. Partly because of these efforts, Peru
managed to climb up to third position (after Italy and Spain) in the global export
ranking of artichokes, where it was absent only a decade ago.102 In fact, during
the first phase of the programme, project clients were responsible for 30 to over
50 percent of the total export of artichokes from Peru (USAID, 2008a; 2008b).
The strategy of the Project to develop the trout value chain was different: it
focused on helping one large client develop a large supply base (more than 600 small
trout producers) in various corridors. By linking this client with potential custom-
102
http://www.siicex.gob.pe [last accessed May 2013].
ers, the Project helped achieve new deals for 680 tonnes of trout products worth
US$5.8 million by identifying small-scale trout farmers in Huancayo, Huancavelica
and Puno interested in and able to supply the processing firm. It also facilitated
consultancies and TA to help the company transfer trout farming technology to its
suppliers to comply with technical standards for exports to the EU, United States
of America and other markets (ibid.).
In May 2006, USAID added forestry certification to the PRA Project’s BDS com-
ponent. The target was to achieve Forest Stewardship Council (FSC) certification of
400 000 ha of forestland in the Cusco, Pucallpa and San Martín corridors through
the application of a PRA business approach. Such certification does not necessarily
translate into higher prices, but is instrumental for accessing international markets.
The Project helped to forge alliances between private enterprises and native com-
munities, and provided training and TA to help them achieve the FSC certification,
improve their forest management standards and market their forestry products bet-
ter. In addition, it worked closely with the forest certification office of the national
Natural Resources Institute to expedite administrative procedures – the time to pro-
cess certifications was cut by as much as 60 percent. The Project contributed to the
certification of 394 115 ha of forest, with 70 percent of this certification occurring
in collaboration with native communities and 30 percent on forestry concessions
(USAID, 2006; 2008a; 2008b).
125
Chapter 7
Delivery at scale:
corridor governance
7.1 CORRIDOR LEADERSHIP AND ALIGNMENT OF STAKEHOLDERS’

VISIONS AND GOALS
The corridor’s reason for existing, whether it is geographic, demand driven or
political, is a significant determinant in its evolution from transport to economic
corridor. The same logic applies to the institutional driver or main supporter of
the corridor programme. The promoter can be a national and/or local government,
an international financial institution (IFI) (regional bank), a bilateral agency or a
regional integration body, among others; or a combination of all these actors via a
partnership agreement, officialized in one way or another. The nature of the cor-
ridor programme is closely linked to the identity of the main driver.
By nature, corridor programmes are complex and resource-intensive operations.
This means that behind the leading corridor institution there is a cohort of develop-
ment partners and private companies that collaborate in the design and implementa-
tion of operations. This is exemplified in Table 40, which provides a summary of the
various actors involved in the six corridor experiences appraised.
Among the main promoters of economic corridors are multilateral development
finance institutions. In particular, regional banks – ADB in Asia, AfDB in Africa and
IaDB in Latin America – are highly involved in this type of initiative. They primarily
support cross-country corridors, but also national corridor experiences. Both ADB
and IaDB are currently using economic corridors as their main strategy for regional
integration (ADB, 2011c; 2012e; IaDB, 2011). Symbiotic partnerships frequently
emerge between these IFIs and regional trading blocs. Some examples found in the
course of this study are the cases of UNASUR and the IIRSA corridor programme,
ASEAN in the GMS corridor programme and EAIC, as well as the tripartite in the
North-South, Northern and Central Corridors in eastern and southern Africa. For
example, Bafoil and Ruiwen (2010; p. 80) noted “GMS regional integration is largely
driven by ASEAN, but also by ADB which has made significant loans to the GMS
economies for their development projects”.
Moreover, bilateral and multilateral aid plays a key role in corridor programmes.
Although there are several examples of “neutral” bilateral aid (e.g. in the Nordic
countries), most donors have either historical ties (such as a colonial past) with
the corridor countries or strategic interests in them. In particular, the United
Kingdom through DFID and the United States of America through USAID are
two bilateral donors that participate in almost all the corridor programmes, except
in the Indonesian case, which is the only one without support from development
TABLE 40
126
Main stakeholders involved in the corridor programmes analysed
Governments Government Governments of Governments Government Government Government of United

of Mozambique the ten countries of the six of Indonesia of Peru, SIEX Republic of Tanzania
involved, countries programme (co-chair of Executive
including involved and Lima’s Committee)
local Chinese regional
governments government
Multilateral AfDB ADB ADB AfDB

development
finance institutions IFC EBRD EIB World Bank
World Bank IMF IFAD
(agriculture)
IDB
NDF (climate
World Bank change)
Making economic corridors work for the agricultural sector

OFID
World Bank
Bilateral/ Japan Denmark Australia USA/USAID Ireland

multilateral aid
Norway EU Denmark Norway
Netherlands Finland EC UK/DFID
South Africa (DBSA) Germany Finland USA/USAID
UK Japan France
USA Kuwait Germany
Republic of Japan
Korea
Netherlands
Russian
Federation New Zealand
Spain China
Switzerland Republic of
Korea
UK
Spain
USA
Sweden
Others
Switzerland
UK
USA
TABLE 40 (Continued)
Chapter 7 – Delivery at scale: corridor governance

Multilateral technical UNDP FAO FAO

agencies
ILO
IOM
UNDP
UNEP
UN ESCAP
UNESCO
WHO
Private actors AgDevCo (lead Private Private Private One AgDevCo

(for profit) technical team) companies via companies via companies international (co-lead technical team)
infrastructure infrastructure via private consulting
InfraCo PPPs PPPs investments firm (main Prorustica
and PPPs contractor) (co-lead technical team)
Prorustica
Seven mining Unilever (co-chair
Yara International of Executive Committee)
companies
Other agribusiness and one Yara Int.
firms, private construction
banks and mining company Others
companies (PPPs to set
up ESCs)
Private foundations Hewlett Foundation CONFIEP WEF

and international/
national NGOs NEPAD Business Clinton AGRA
Foundation Foundation (funded by Rockefeller
Foundation and Bill &
AGRA Melinda Gates Foundation)
TechnoServe
Others
Source: www.adb.org [last accessed August 2013].
127
partners, given its middle-income country status.103 Other countries lend assistance
to the corridor programmes analysed in accordance with their “good neighbour”
policy. For example, South Africa supports BAGCI, whereas Australia, China and
Japan support the GMS corridor programme. Australia has invested around US$150
million in transport and energy projects in the GMS corridor programme under
co-financing arrangements with ADB and the World Bank (AusAID, 2009). China
and Japan are essential donors and supporters of the GMS corridor programme,
both within and outside the framework of the programme.104 For both Japan and
China, maintaining strong ties with GMS countries is strategically important, given
the trade and FDI flows established between them and the GMS5 economies.
Moreover, for China, cooperation with Southeast Asian nations is a crucial test of
its “good neighbour” policy, particularly for Yunnan province. There seems to be a
geographic division of tasks between the two countries. Japan is keen on supporting
the development of the EWEC corridor, given the strategic importance of Viet Nam
and Thailand for Japanese interests (Cochrane, 2012; Reilly, 2013). For China, on
the other hand, NSEC is vital to link land-locked areas of southern China to areas
where deep seaports can be constructed in Southeast Asia. In particular, China per-
ceives NSEC’s potential as a “landbridge” between Shanghai and Singapore (ibid.).
Some bilateral agencies support corridors where multinational corporations
originating in their countries have strategic interests, such as in the African cor-
ridors. These circumstances may create some unease within civil society.
An essential actor in this picture is the government of the host countries, either
as promoter or supporter of the corridor initiative or, in some cases, as aid recipi-
ents. The involvement of the public sector is heterogeneous, but can encompass
line ministries (e.g. agriculture, transport, energy and trade), regional and provin-
cial governments, and state-owned enterprises or parastatals, depending on the
case. Regional and provincial governments and agencies are indispensable for the
successful realization of corridor plans. Examples are the contributions of the Vale
do Zambeze agency to BAGCI, the Chinese provinces of Guangxi, Xinjiang and
Yunan to the CAREC and GMS programmes, the regional government of Lima to
the PRA corridor project and the Indonesian states to MP3EI. The relationships
between central and decentralized governments and among central agencies are
not always without problems. Some coordination issues were found, for example,
between federal and regional authorities in Indonesia and Ethiopia, creating prob-
lems to deploy or implement the economic corridor programmes.
The level of ownership of the programme by the national/local govern-
ments varies from one country to another. The strongest involvement is
obviously that of the Government of Indonesia, in its role as main promoter.
SAGCOT also has high-level buy-in from the government, with the Tanzanian
President showing a strong personal commitment to the initiative (GMF, 2013).
103
http://data.worldbank.org/income-level/MIC [last accessed July 2013].
104
Japan and China are two of the largest subscribers to ADB, holding 15.65 and 6.46 percent
shares in the Bank’s capital, respectively; their respective voting rights are 12.82 and 5.47 percent
(Brahmawong and Sukhraromana, 2013). These countries have also made significant investments in the
GMS corridors through their official development assistance and through private corporations.
Chapter 7 – Delivery at scale: corridor governance 129
BOX 19
Coordination problems between central and decentralized public authorities
The Government of Indonesia acts as a regulator, facilitator and catalyst to support national
growth through the development of economic corridors. In its role of regulator, the govern-
ment plans to amend or remove (debottlenecking) regulations that inhibit investments. As a
facilitator and catalyst, it provides fiscal and non-fiscal incentives, and promotes the partici-
pation of the private sector and other key stakeholders in the implementation of the mas-
terplan. The central government is responsible for deregulating certain regulations that hold
back investments and for allocating a central budget for implementing major infrastructure
works. Provincial and regional governments, on the other hand, are responsible for the
development of key sectors and the intra-island or intracorridor infrastructure established
in their territory. Both central and regional/provincial authorities ought to make the cor-
responding provisions in their regular budgets to implement the masterplan. However, the
dialogue between central and local counterparts is not always as it should be, and resource
allocation is also not always well aligned.
In order to overcome this, a task team has been set up at corridor level, formed by rel-
evant stakeholders from the central and local government and businesses. At the regional
level, the governor plays a key role in the implementation of regional development pro-
grammes in each economic corridor. Governors are expected to establish and enhance their
fora to create unity and harmony in inter- or intra-economic corridors.105
Ethiopia is another country that has encountered difficulties in implementing corridor
initiatives because of central-local imbalances. In the mid-2000s, the Government of Ethio-
pia formulated an economic corridor strategy to accelerate economic growth and optimize
investment. However, problems soon surfaced. The central and regional governments106
failed to develop a shared vision of corridor development, giving rise to significant confusion
about the concept itself and implementation modalities, including potential implications for
regional investment plans and cross-border coordination (UNDP, 2011). In 2007, in light of
the above, the Ethiopian Government asked three United Nations agencies107 for support
to develop a national corridor strategy, called the “National Framework and Strategy for
Identification, Establishment and Operation of Economic Growth Corridors” (ibid.). As part
of this support, several policy fora were organized to clarify policy direction. Learning mis-
sions were set up in Southeast Asia to gain from more advanced experiences in economic
growth corridors, and a study was commissioned to establish a standardized definition of
economic corridors suitable for the Ethiopian reality, set up criteria for selecting corridors,
propose organizational and coordination arrangements for establishing and operating cor-
ridors at the federal and regional levels, and identify financing and investment alternatives
and mechanisms (ibid.).
105
www.kp3ei.go.id [last accessed July 2013].
106
Ethiopia is a federal country where each regional state has a high degree of autonomy.
107
FAO, UNDP and the United Nations Industrial Development Organization (UNIDO).
In the case of Peru, the Peruvian Government has gradually increased its commit-
ment to the PRA Corridor Project. Initially, its involvement was limited to ProIn-
versión, the SIEX programme and Project Peru,108 but eventually the GoP became
the recipient of the PRA model, officially transferred in 2012. Something similar has
occurred in the CAREC and GMS programmes where ADB insisted in transferring
increased responsibilities to national counterparts and focal points, including the
function of resource mobilization.
Multinational and domestic corporations also support corridor programmes,
either through multistakeholder partnerships such as those in Africa or through
private-donor collaborations (as in Peru). For example, multinational agribusiness
firms and some local firms have been pivotal in the realization of the corridor
partnerships in Mozambique and the United Republic of Tanzania. A sign of their
importance is that Unilever (United Kingdom/Netherlands) and the Norwegian-
based Yara International are on the Executive Committee of SAGCOT. Moreover,
the Chief Executive Officer of Yara was the one who put forward the idea of
piloting an agrocorridor experience in Africa, which eventually gave way to the
SAGCOT and BAGC partnerships.
Another alternative is the involvement of private actors in corridor programmes
as part of their corporate social responsibility strategy. In Peru, eight private firms
signed a partnership agreement with the donor (USAID) to co-finance the establish-
ment of corridor centres in their regions. These firms, mostly mining companies,
were not involved in agribusiness operations, but saw an opportunity in the corridor
programme to contribute to the development of their territories and communities.
International consulting firms play a pivotal role in corridors, particularly in the
prefeasibility and design phases, but also as managers or technical leaders of the
corridor implementing bodies. Cases in point are Chemonics International in the
Peruvian corridors, and AgDevCo, InfraCo and Prorustica in the African corridors.
Two important categories of private sector actors involved in corridor operations
are companies specialized in infrastructure development that enter into partnership
with the public sector to build, co-finance and operate infrastructure works. These
companies may develop and/or manage either large connective infrastructure (e.g.
ports and roads) or last-mile infrastructure, as in the ISCs mentioned in the BAGCI
case. The second category is logistics and trade companies that are key partners in
the design and deployment of transport and trade facilitation activities, which are a
core area of work in regional corridor programmes.
From the discussions so far, it might seem that private actors play only a second-
ary role in corridor programmes, accompanying initiatives championed by national
governments alone or supported by the international community. However, in
many parts of the world, private actors are leading corridor efforts, as in the
Mercosur soybean corridors or the Maputo-Gauteng Corridor in southern Africa.
The rule of thumb is that in countries and regions where the private sector is quite
developed, the evolution from transport to economic corridor is mostly left to the
108
ProInversión is the Peruvian IPA. The SIEX programme promotes exports from the Peruvian
highlands and Project Peru seeks to enhance intra- and intercorridor connectivity.
initiative of private actors. But even in the cases analysed where the private sector is
not particularly thriving, private investments constitute a large proportion, ranging
from a third to half of the overall estimated investments induced by the corridor
programmes (see discussion in section 6.1.) In fact, the corridor initiatives studied
have been primarily conceived as catalysers of private investment and entrepre-
neurial glue. This is an expression of the most common pro-corridor argument,
which postulates that the attraction of private sector investments in growth nodes
along corridors may alleviate coordination failures and the scarcity of capital in
developing countries (World Bank, 2010).
Obviously, the extent to which a corridor development initiative is championed
by the private or public sectors influences the type of policies promoted and the
impacts generated. The Maputo-Gauteng experience in southern Africa shows that,
when corridor development is led by the private sector, it may be more difficult for
governments to impose people-centred policies. In contrast, expectations in BAGCI
– which is largely in the hands of public authorities – are that the corridor benefits
be more equitably distributed.
In any case, multilevel governance systems are in place in the majority of inter-
ventions, including public and private sector actors, IFIs, donors and civil service
actors, among others. Such systems should in theory balance the interest of the
various stakeholders and contribute to a more equitable distribution of the value
added through corridor interventions.
7.2 ENGAGEMENT MODELS

Contract farming is the cornerstone of the strategy of the GMS, PRA and Indone-
sian corridors to link farmers to markets. Contract farming operations are facilitated
to improve smallholder farmers’ access to markets, inputs and services.
Similarly, the agrocorridors of Mozambique and the United Republic of Tanzania
focus on promoting commercial farming in a way that is socially inclusive and envi-
ronmentally sustainable. The agricultural potential of both corridors is noteworthy.
In SAGCOT, there are 7.5 million ha of arable land available, of which less than
one-third is currently under cultivation, against 10 million ha in BAGC, where the
percentage actually cultivated is even lower at 15 percent (Table 41). However, in both
corridors, commercial farming is the exception rather than the rule: 0.26 and 1.5 per-
cent of the available arable land in Beira and SAGCOT, respectively. In the latter case,
only 5 percent of the area under production corresponds to medium- and large-size
holdings dedicated to sugar, rice and tea production (SAGCOT, 2011; DFID, 2012).
Smallholder farming is overwhelmingly predominant (95 percent of cultivated land),
and is mostly subsistence-oriented (rice, maize, cassava and pulses) using traditional
methods (SAGCOT, 2011). The baseline of area under irrigation for food and horti-
culture crops in the corridor is under 1 percent of total cultivated land, approximately
20 000 ha. Over 18 000 ha belong to two large sugar and tea estates, whereas less than
2 000 ha are dedicated mainly to smallholder rice cultivation (SAGCOT, 2011).
The goal is to put 350 000 ha into profitable production in SAGCOT and
270 000 ha in the Beira Corridor to serve regional and international markets, as
seen in Table 41. The new cultivated land and other efforts to develop agriculture
in the southern corridor are intended to generate a threefold increase in agricultural
output (SAGCOT, 2010; 2011).
TABLE 41
Use of land in BAGC and SAGCOT
BAGC SAGCOT
Total corridor land (ha) 22 700 000 28 700 000
Available arable land 10 000 000 7 500 000
Baseline of cultivated land … 1 498 200 2 090 000
… by smallholder producers 1 472 500 1 980 000
… by large commercial farmers 25 700 110 000
Additional cultivated land (target) … 270 000 350 000
… under cultivation 190 000 –
… rainfed 80 000 –
Sources: AgDevCo and InfraCo (2010); SAGCOT (2011).
To promote commercial agriculture, BAGCI has explicitly expressed a prefer-

ence for contract farming, outgrower schemes and other equitable agribusiness
models that benefit smallholders and their communities. Through such arrange-
ments, large nucleus farms are expected to provide goods and services such as
irrigation; input provision – seeds, fertilizers and pesticides; agricultural machinery;
processing and storage services; financing; and access to markets, for smallholders
or outgrowers living in the surrounding area. BAGCI encourages the concentration
of farming hubs, nucleus farms and irrigated farm blocks109 in specific locations or
clusters where processors, agricultural support service providers (e.g. extension and
finance), specialized suppliers and associated institutions are also present. See the
graphic representation of this strategy in Figure 27.
The BAGC Catalytic Fund, as mentioned earlier, invests in early-stage farming
and agroprocessing businesses that integrate smallholder and emergent farmers.
SAGCOT’s approach to agricultural growth, similar to that of the Beira Corri-
dor, revolves around smallholder farmers engaging in contract farming with nucleus
estates, agroprocessing and trading companies. Through these schemes, smallholder
individual producers and their associations can access inputs, extension services,
value-adding facilities and markets (SAGCOT, 2011).
The SAGCOT investment blueprint foresees other types of innovative finance,
besides the Catalytic Fund, to help catalyse private investment in socially respon-
sible agriculture projects, such as (i) patient capital provided by donors to finance
last-mile infrastructure; and (ii) loan guarantees and currency risk instruments to
help leverage capital from the domestic banking sector into agricultural companies.
The SAGCOT initiative plans to roll out activities pertaining to these new financing
facilities (SAGCOT, 2011).
109
See Glossary.
figure 27
Nucleus farm hub, outgrower model and smallholder block farming
Serviced
outgrower
plots
Outgrower irrigated farm blocks
connected to water and power supply
Commercial
farm hub with
packing house
Small dam/ and storage
storage reservoir facilities
Feeder road
Electricity Local village
Water supply
Trunk infrastructure: main road and power network
Source: author’s elaboration based on AgDevCo and InfraCo, 2010.
The preferred engagement models may also refer to environmentally sustainable

business practices. For example, SAGCOT favours green growth models. Research
on this topic is crucial. This is why, as part of the SAGCOT Investment Greenprint,
Yara, Syngenta, the University of Life Sciences in Norway and the University of
Sokoine in the United Republic of Tanzania have launched a research project exam-
ining the effects of best practices in sustainable farming. Preliminary field trials have
demonstrated a high potential to double yields and farmer income levels without
expanding farm area, while keeping GHG unchanged.110
110
http://www.yara.com/sustainability/how_we_engage/africa_engagement/growth_corridors/index.
aspx [last accessed July 2013].
7.3 INSTITUTIONAL ARRANGEMENTS AND DELIVERY MECHANISMS

All the corridor cases covered by this study point at multilevel governance systems
that influence the operation of agricultural corridors. Many players are involved
in the implementation of these corridors, including public authorities/entities, the
private sector, NGOs and civil society. Therefore, adequate governance mechanisms
such as partnerships are vital.
There are various institutional models to structure these complex multistake-
holder relationships, as summarized in Table 42.
Indonesia has not established additional organizational structures to implement
the corridor strategy. It relies on the existing public structures at national and local
level to implement the corridor strategy stated in the MP3EI. The funding for
implementing this strategy comes from the national budget.
ADB-led corridors have embraced a dual model that at regional level counts on
corridor coordination bodies, but at national level leaves implementation to the
central and local authorities of the participating countries. This model has functional
corridor institutions that involve political and technical authorities of the participat-
ing countries, supported by an ADB-run Secretariat. There are working groups and
fora that coordinate the regional activities concerning each sector. See the example
regarding the GMS in Box 20.
Moreover, these corridor programmes have put in place regional mechanisms and
institutions to engage and activate key stakeholders. For example, CAREC has set
up a Business Forum to promote and support effectively private sector participa-
tion in economic corridor development. Similarly, in the GMS corridors, Economic
and Business Fora play a pivotal role to improve coordination of GMS programme
measures and private sector engagement, respectively (ADB, 2010c). In addition,
institutions to create and disseminate knowledge on corridor-related issues have
been created, such as the CAREC Institute.
TABLE 42
Corridor institutional settings
Type of model Main organizational traits
Regional coordination structure assisted by ADB-run Secretariat +

ADB-led corridors principle of subsidiarity to implement the corridor plan at the national
level
Lack of corridor-specific institutions. The corridor programme is

GoI-led corridors
mainstream in the public system and budget
Direct implementation through corridor-specific institutions: a central

office and ESCs, outsourced to different types of operators following a
PRA model competitive process
Market-based PPPs to fund and operate the development strategy of
some corridors
Direct implementation through corridor-specific institutions: a corridor

WEF model PPP legally registered, supported by an independent Secretariat, corridor
centres and funds (e.g. CTF)

BOX 20
Institutional arrangements and delivery mechanisms of the GMS corridor
programme
The GMS programme has opted for a model of functional corridor-led institutions for tech-
nical cooperation. It is managed by a multilevel institutional mechanism dating from 1995
that involves both political and operational authorities of the GMS participating countries,
as evidenced in Figure 28.
The GMS Summit is the maximum decision body of the GMS programme, where the
Prime Ministers of the six countries gather together with ministers and country delegations,
representatives of the private sector, ADB and other development partners. The Summit is
held every three years and is hosted by GMS countries on a rotational basis.111 They serve as
an important venue for GMS leaders to provide high-level political commitment, discuss and
agree on priority actions in the GMS programme, and endorse important documents, such
as the ten-year GMS Strategic Frameworks, specific corridor strategies and sectoral action
plans, including those in agriculture (ADB, 2012a).
FIGURE 28
GMS programme institutional structure
GMS Summit
(triennal)
National
ADB GMS Ministerial-level Conference Coordinating
Secretariat (annual) Committee
in each
country
WG on Agriculture WG on tourism
WG on Environment Energy sector forum

Senior
WG on HR Development Officials’ Subr. telecoms forum
meeting
WG on Investment Subr. transport forum
WG on Trade Facilitation GMS Business forum
Source: author’s elaboration based on ADB, 2012a.
111
The first Summit was held in Phnom Penh (Cambodia) in 2002; the second in Kunming (Yunnan
Province, China) in 2005; the third in Vientiane (Lao PDR) in 2008; and the fourth and last in
Naypyidaw (Myanmar) in 2011 (ADB, 2012a).
BOX 20 (Continued)
The GMS Ministerial Conferences are yearly meetings involving GMS Ministers, accompa-
nied by GMS senior officials, headed by the GMS National Coordinators, together with ADB,
other development partners and representatives from the private sector. The Conference
reviews the overall progress of key deliverables for the GMS programme; gives broad direc-
tions to the programme and prepares action plans; dialogues with development partners
and the private sector to determine ways of increasing their participation; and undertakes
preparatory work for the GMS Leaders’ Summits. Senior Officials’ meetings, for example of
senior agricultural civil servants, are held periodically to discuss and agree on the programme
and activities, and conduct other preparatory work for the Ministerial Conferences (ibid.).
Each country has set up a national GMS Secretariat that acts as the government focal
point to assist in the implementation and coordination of the GMS programme. The Secre-
tariat implements, evaluates and follows up the working plan on GMS economic coopera-
tion, and reports to the respective line ministries and working sectors. It also coordinates
with other stakeholders such as NGOs, local and provincial governments, and the private
sector at the regional (GMS Business Forum), national and provincial levels. As shown in
Figure 28, the ADB GMS Secretariat provides central technical, administrative, facilitation
and financing support to GMS meetings and subprojects (ibid.).
The implementation of the GMS programme has been supported by sector fora and
working groups in the nine sectors of cooperation, as shown. There is a specific Working
Group on Agriculture (WGA), whose core mandate is to support the design and implemen-
tation of priority projects under CASP “to promote agriculture trade, food security, and
sustainable livelihoods”.112 WGA was proposed as a mechanism for agricultural cooperation
in the GMS at the Tenth GMS Ministerial Conference in November 2001, and was eventu-
ally established in 2002. It has a national Secretariat in each country composed of a WGA
national coordinator and support staff.
Under the current strategic framework, the GMS WGA continues to monitor the overall
implementation of CASP II and ensures that it is well coordinated with other sector programmes.
However, new elements have been introduced to improve WGA’s performance, as follows:
WGA is expected to seek a broader range of financing sources, including multilateral and
bilateral development partners, private enterprises and national government financing.
Actions are being taken to strengthen WGA’s linkages with FAO, IFAD, CIRAD, CGIAR,
SEARCA and others involved in agriculture in the subregion (ADB, 2007a).
Plans for further strengthening the WGA Secretariat with full-time technical and adminis-
trative in-country staff are under way. Furthermore, a more effective institutional mecha-
nism for WGA is being defined to improve its performance and engage GMS member
countries in a more systematic and sustained manner. Following the endorsement of
the new strategic framework, GMS countries undertook a fine-tuning of GMS fora and
working groups, including WGA, to sharpen their focus and make them more effective
(ADB, 2012a).
112
www.adb.org/countries/gms/sector-activities [last accessed July 2013].
BOX 20 (Continued)
WGA’s current mandate emphasizes country-led initiatives aimed to promote cross-bor-

der agricultural trade and agribusiness investment as well as other regional cooperation
initiatives in agriculture.
To ensure that private sector perspectives are well reflected in the deliberations of all
the GMS sector fora and working groups, the GMS programme launched the GMS Busi-
ness Forum in 2000, with support from ADB and UN ESCAP. This forum brings together the
business community throughout the subregion via the national Chambers of Commerce and
Industry.113 It provides a channel for public-private dialogue on policy issues; promotes net-
working among enterprises, business chambers and investment promotion agencies in the
context of GMS-related activities; fosters the expansion of PPPs for infrastructure develop-
ment and encourages the development of SMEs; and plays a vital role in the capacity build-
ing of the private sector and its associations in GMS.114 In particular, the Business Forum
supports the implementation of CASP and CBTA, especially the development of business
networking along the corridors and the development of quality standards for services. For
example, the forum established in 2010 the private sector-led TTF-TAF to review the business
environment and facilitate the implementation of customs and transit system in all the cor-
ridors. In 2011, the forum set up a unified platform for trade, transport, and logistics com-
panies, known as FRETA, to support TTF-TAF and work together with GMS governments.
A fairly recent development in the GMS programme governance is the establishment of
an umbrella structure at the corridors, known as the ECF.115 This forum is the main advocate
and promoter of multisector coordination in the GMS corridors, raising awareness of needs
and priorities, and increasing the involvement of local authorities and private actors in cor-
ridor affairs (ADB, 2011a).116
The current Strategic Framework 2012–2022 has introduced three new elements related
to corridor and overall programme governance.
The creation of a knowledge platform to address second-generation issues where high-
quality analytical work, effective discussion and consensus building around its results will
be critical, such as the interlinkages between energy, agriculture, food security and the
environment (ADB, 2011a; 2012a).
113
www.gmsbizforum.com [last accessed July 2013].
114
Ibid.
115
www.gmsec.org [last accessed July 2013].
116
The first ECF took place in Kunming, China, in June 2008, followed by ECF-2 in 2009, ECF-3 in
2011 and ECF-4 in 2012.
BOX 20 (Continued)
A renewed commitment to develop stronger linkages with other regional initiatives and
organizations working in the GMS, such as CAREC and ASEAN, among others.117
The formation of a high-level board of advisors to review the programme periodically and
advise member countries on areas for improvement (ADB, 2011a; 2012a).
One of the main differences between the GMS and CAREC programmes so far
as this study is concerned is the treatment of agriculture as a core sector in the first
programme and as a second-tier sector in the latter. This implies that the GMS has a
regional coordination committee in place for the agricultural sector that interacts with
sectoral focal points nominated by each GMS country. On the other hand, CAREC
collaboration in agricultural issues is ad hoc, and therefore there is no specific commit-
tee for agriculture or other specific governance mechanism. It is the CAREC Secre-
tariat that coordinates activities in this field as part of its general coordinating functions.
At a country level, national coordination committees have been established to
liaise with the different ministries and local agencies concerned with the imple-
mentation of specific corridor activities at the national level. Bafoil and Ruiwen
(2010; p. 80) point out that GMS “economic corridors are a mix of formal (because
they are signed by heads of state) and informal mechanisms (they tend to involve
local actors) for regional cooperation” – and the same could be said of CAREC.
The important point is that implementation of the corridor interventions is not
undertaken through a parallel structure at the national level, but through already
established channels involving national and local public agencies.
The PRA corridors, on the contrary, have created corridor-specific structures
using an outsourcing model where private companies, NGOs or consortia of
various organizations are contracted out to run the corridor centres or ESCs. These
centres are the direct providers of BDS and promoters of investment along the cor-
ridor. The overall management and coordination of the corridor programme have
been entrusted to a company, together with M&E. Evidently, the corridor centres
liaise with national and local authorities and other actors that would like to pursue
some kind of collaboration with the programme. As a result of this opening to other
stakeholders, the PRA Project has succeeded in creating market-based business
models for PPPs, for the funding/operation of the corridor strategy and in creating
interest to mainstreaming the PRA model to the point that it has become a national
programme. See Box 21 for further information.
117
ASEAN and ASEAN+3 focused on the integration process and formation of an ASEAN economic
community; the Mekong River Commission (on water transport infrastructure development and
management, and other aspects of water resource management of the Mekong River; CAREC and
ACMECS (on the transport and trade agenda); the Bay of Bengal Initiative for Multi-Sectoral Technical
and Economic Cooperation; the Indonesia-Malaysia-Thailand Growth Triangle (on broader connectivity
issues); and the Southeast Asian Ministers of Education Organization (on human resources development).
BOX 21
Institutional arrangements and delivery mechanisms of the PRA Project
The PRA corridor programme started as a donor-funded initiative, integrally implemented by

private sector contractors, including ESC operators and USAID’s contractor (CONFIEP first,
and Chemonics International later) in charge of overall supervision and coordination.
The management of the central office in Lima reflected the Project’s pro-private sector
stance. It was run by CONFIEP as the implementing agency, with the support of Chemon-
ics International, a development consulting company, which provided strategic advice and
international technical advisors to CONFIEP and M&E services for the project. CONFIEP had
a double role to fulfil. As an association, it was responsible for policy analysis and dialogue
activities and its individual associates represented the natural buyers with whom the Project
would work, following its “orders first” approach. However, in 2002, CONFIEP left the
project, handing over the baton to Chemonics International. Since then, a Chemonics-run
PRA central office in Lima supports the ESCs and their subcontractors. This office provides
executive direction and technical supervision to ESC staff and facilitates information and
knowledge-sharing among the centres; it also provides oversight to the M&E unit, and builds
relationships with public agencies and business people in Lima and other non-corridor cities.
The management of the ESCs in the corridors is outsourced to private operators. During
PRA I, these operators were primarily NGOs (mostly international organizations), but also
consulting companies and universities, operating individually or in consortia. In the early
2000s, this model of outsourced top-to-bottom implementation by private contractors was
unique among donor and public-sponsored programmes in Peru.
Over the years, the PRA Project partnered with private firms and governmental entities
to co-fund ESCs to spark agribusiness development in new economic corridors. The first
example of this spirit of donor-public-private collaboration was the PRA Alliance signed in
2007 by PRA, Minas Buenaventura, Antamina and SIEX. PRA II devoted most of 2009 and
2010 to designing and developing tools to support this alliance-building and negotiation
process, such as GDA proposals118 including ESC start-up costs and co-financing schemes,
MOUs, grant agreements and procedures to operationalize these elements. The result was
an expansion of the PRA Alliance to 12 signatories: USAID, seven mining companies, one
construction firm, the Clinton Foundation, the SIEX programme and the regional govern-
ment of Lima (which is supporting the Sierra Norte de Lima-Huánuco corridor) in represen-
tation of the public sector. These partnerships signalled that the PRA Project was not just a
donor project, but one that both private and public sectors could identify with and support.
118
These partnerships took place under the umbrella of USAID’s GDA programme. As explained,
GDA develops partnerships across the globe with private sector organizations to leverage resources and
explore innovative approaches that amplify the impact of socio-economic development initiatives. Private
companies engage in this initiative as part of their corporate social responsibility (CSR) programmes.
BOX 21 (Continued)
Each centre is run by an ESC Steering Board, which is formed by a representative of

each partner organization and alternate members. Each board meets on a quarterly basis
to discuss and approve the centre’s annual work plan, discuss the business plans signed
with clients, and review progress made towards sales and investment targets. The partner
companies have internalized the PRA Project’s practical approach to business development
and offer ideas proactively in the ESC board meetings.119
Operationalizing the GDA-based model with ESCs funded from multiple sources posed
some initial challenges. With financial reporting and administrative management guidance
often varying from one funding source to the next, the programme focused on streamlin-
ing operational systems and procedures (emphasizing the need for simplicity, flexibility and
effectiveness) that would comply with the internal policies of each financing source without
hindering the ESC performance.
WEF-led corridors have also developed corridor-specific institutions. To start

with, these corridors are led by multistakeholder partnerships legally registered
in their respective countries. These PPPs are assisted by independent, professional
secretariats (same outsourcing model as in Peru). Two other corridor structures
have been set up: an independent institutional setting to manage the financial
facilities envisaged in the corridor strategy; and corridor centres (two in BAGCI
and one in SAGCOT) that promote investment and facilitate information and
BDS to farmers and firms. For example, these centres help investors obtain licens-
ing, meet tax regulations, procure utilities, facilitate import/export and assist in
labour recruitment.
One factor that has helped to shape or transform the institutional setting of
the appraised corridor programmes is the extensive use of PPPs and multistake-
holder partnerships. Four types of PPPs emerge from monographs on corridor
programmes, as presented in Table 43.
The corridor programme, for example, can facilitate PPPs between cor-
ridor beneficiaries thanks to dedicated financial facilities (e.g. catalytic and
smallholder-support funds) and brokering and investment promotion services
provided by the corridor centres. This type of PPP is widespread in the PRA
and SAGCOT corridors.
Furthermore, PPPs are increasingly becoming the vehicle for delivering soft
and hard interventions in the corridors. A case in point is the use of a PPP for
developing a corridor-bound agricultural market information system in the GMS.
119
Source: personal communication.
BOX 22
BAGCI’s institutional arrangements and delivery mechanisms
BAGCI has two institutional pillars: the BAGC partnership (BAGCP), which is managed by

a full-time Secretariat; and the BAGC Catalytic Fund, managed by AgDevCo on a cost-
recovery basis, as reflected in Figure 29. Both the partnership and AgDevCo are registered
under Mozambican law, the former as a non-profit membership association, and the latter
as an investment company.
BAGCP has a Board of Directors (with a number of subcommittees) and a full-time
Secretariat that supports the Board. The BAGCP Board is responsible for translating the
guidelines provided by the broader membership into action. It has five directors: the Execu-
tive Director of the BAGCP Secretariat; one representative of CEPAGRI; one representative
of the umbrella farmer organization; and two representatives from the private sector.120
FIGURE 29
BAGCI institutional framework
Private sector
BAGCI
Government BAGC Partnership Partnership Board
Secretariat
Donors Secretariat supports
and promotes the CF
Investment BAGC Catalytic

Committee Fund (CF) S.A.
Managed by AgDevCo CF Board
Source: author’s elaboration based on AgDevCo and InfraCo, 2010.
The Board serves as a coordinating platform that brings together stakeholders to discuss
specific issues and share information. It facilitates operational support for the partnership
and implements specific programmes funded by development partners in the framework of
BAGC. It advises the Catalytic Fund (CF) on the use of grants and concessional funding121
for smallholder farmer development programmes. Additionally, it lobbies government and
development partners to address key constraints to agricultural growth, and also monitors
and assesses the impacts of BAGCI.
120
www.beiracorridor.com [last accessed July 2013].
121
This is an alternative term for “soft loan” or financing below market rate of interest.
BOX 22 (Continued)
The BAGC CF, as mentioned earlier, invests in early-stage farming and agroprocessing
businesses that integrate smallholder and emergent farmers.122 It has a board of four direc-
tors: a representative from AgDevCo, the fund manager, and three directors appointed
by the BAGCP Board (AgDevCo and InfraCo, 2010). It also has an Investment Committee
responsible for making allocation decisions in accordance with the recommendations of the
fund manager. A Mozambican company (BAGC Investment Company) is being established
to inherit the work from AgDevCo. There are challenges ahead to operationalize the new
governance structures and ways of working between BACG and the local fund manager in
an effective and efficient manner (DFID, 2013).
Another example is the launching of an insurance scheme for selected agricultural

crops in the Beira Corridor via a PPP. One of the most recurrent applications of
the PPP model is for infrastructure development, as seen in BAGCI, MP3EI, PRA
and SAGCOT. Such partnerships can tackle the funding, building and management
of major connective infrastructure such as ports and highways as discussed earlier;
market infrastructure such as agrifood markets and warehouses; or last-mile infra-
structure as in the case of the ISCs in the Tanzanian corridor.
The last type of PPP identified is exemplified by the Peruvian PPPs established
in the framework of the GDA programme. In this case, the partnership is between
the Government of the United States of America, through its development agency,
and a private firm (e.g. a mining or construction company). The private company,
most often as part of its CSR strategy, contributes to setting up and operating a
corridor centre to benefit local firms, farmers and communities in general located
in the corridor.
Multistakeholder partnerships go beyond the collaboration between private
companies and governmental insitutions to engage farmer associations, civil society
organizations, IFIs, international technical agencies and bilateral and multilateral
donors. Examples of this model are the Beira and SAGCOT partnerships, which
are among the several country-level partnerships affiliated with the New Vision for
Agriculture. The approach of the SAGCOT Partnership, although innovative, is not
new to the United Republic of Tanzania. In 2005, the Tanzania Agriculture Partner-
ship (TAP) was launched under the coordination of the Agricultural Council of
Tanzania (ACT). TAP is an agricultural PPP with 50 public and private partners123
(SAGCOT, 2010; 2011).
122
See Glossary for a definition of emergent farmer.
123
TAP is an informal PPP platform that works towards improving the production and marketing of
agricultural crops (mainly maize and rice) using a value-chain approach in 25 districts of the United
Republic of Tanzania. TAP’s members include development partners, central and local government
agencies, agribusiness multinational companies, local private companies and international and domestic
NGOs. For further information, see: www.tap.or.tz [last accessed July 2013].
TABLE 43
Types of public-private collaboration present in (agro)corridor programmes
Type Actors Description
A collaboration (usually informal) facilitated

Agribusiness firms and farmer by corridor centres between an agribusiness
Agribusiness PPP
organizations firm and farmers, e.g. a partnership built
around a contract farming arrangement
Government/lead corridor convener Public-private collaboration for co-financing,

+ private company from the building and managing corridor
Infrastructure PPP
transport, energy or construction infrastructures and facilities, such as
sectors, etc. highways, ports, markets and warehouses
Public-private collaboration for co-financing

PPPs for implementing Government/lead corridor convener
and implementing soft corridor interventions
soft corridor + private companies, universities,
such as corridor-bound market information
interventions research centres, etc.
systems or agricultural insurance products
Market-based PPP Government/lead corridor convener Public-private collaboration for co-funding

concerning the + private companies interested in and managing the operation of a corridor
corridor centres local/agricultural development centre and implementation of its strategy
These partnerships have two main benefits. First, at the country level they
broaden stakeholder engagement to farmers’ associations, civil society organiza-
tions, local private sector firms, multiple ministries and local governments. Second,
the partnership becomes a vehicle for coordinating and reinforcing global support
for on-the-ground corridor activity. This support is not just financial, but also
includes expertise, and knowledge about efficient new approaches to agricultural
and local development (WEF, 2013).
Despite their importance, all the above partnerships are fairly new in terms of
their application not only to corridor programmes, but countrywide. This newness
implies a need to transform country-level institutional mindsets and mechanisms.
For instance, in order to work properly, these partnerships may require a transfor-
mation of the legal, regulatory and policy framework in which they are embedded.
Consequently, one of the roles of economic corridors is to test new concepts such
as those of PPPs and multistakeholder partnerships, which can then be upscaled to
the entire country or other fields of work.
145
Chapter 8
Gains and pitfalls
of agrocorridor initiatives
Agrocorridors are perceived as a promising development model that may generate

significant gains and impacts on economic growth, trade and connectivity (Infante,
2012). Corridor programmes, as the megaprojects that they are, often become the
backbone of national and even regional economies. However, the megaproject label
entails many difficulties. It means that corridors – especially regional integration
ones – mobilize formidable resources; engage multiple stakeholders; deal with a
complex, interwoven set of sectors (e.g. transport, energy, telecommunications, agri-
culture, mining and tourism); and extend beyond political cycles (ibid.). Therefore,
they need greater implementation efficiency, oversight, transparency and (mutual)
accountability. Many things can go wrong and offset the potential gains that cor-
ridors may have.
This chapter reviews both the gains and the challenges facing the corridor initia-
tives appraised.
8.1 POTENTIAL GAINS OF AGROCORRIDORS FOR ECONOMIC GROWTH,

TRADE AND CONNECTIVITY
When adequately designed and implemented, agricultural corridors have sub-
stantial positive impacts in terms of economic development, as well as social and
environmental sustainability. Available qualitative and quantitative data showing
such impacts have been gathered and analysed, particularly regarding investment
attraction and income and employment generation. Some corridor initiatives are
young – between one and three years old – so data on quantitative impact are limited
even though results are visible in pilot activities and specific subprojects. In these
cases (BAGCI, MP3EI and SAGCOT), the information presented corresponds to
the expected development benefits associated with the corridors, according to their
masterplans or blueprints.
There are different indicators of the economic performance of corridors. The
most important are GDP gains, additional exports and domestic sales, (private)
investments and employment generation. A summary of some of these indicators
is given in Table 44.
The contribution of these initiatives to the GDP of the corridor area ranges from
1.1 to 12.9 percent, as noted in Table 44. For example, in the GMS corridor improve-
ments represented, GDP gains 1.1–8.3 percent, or 0.7–7.7 percent, excluding
China (ADBI, 2010). The impact of corridors on GDP is highest in the least well-
connected countries, and particularly in Cambodia, followed by the Lao People’s
Democratic Republic and Myanmar. CAREC countries have grown consistently
TABLE 44
Economic performance indicators
GDP gain (%) Incremental jobs Private investment (US$ million)
1)
BAGCI 12.9 350 000 1 356
CAREC – – –
GMS 1.1–8.3 – –
MP3EI 2.4 – 202 980
PRA 1.65–2.35 109 0002) 28
SAGCOT 5.2 420 0001) 2 100
Sources: AgDevCo and InfraCo, 2010; CAREC, 2010; 2012; ADBI, 2010; CMEA, 2011; USAID, 2008a; 2008b;
Milder et al., 2012.
Notes: 1) These data are estimates that include both direct and indirect jobs. 2) This figure reflects the
actual generation of direct jobs created; it does not account for the creation of indirect new jobs.
from 2006 (baseline year) to 2010, with a GDP per capita growth rate of 17 percent
(CAREC, 2010). Some countries such as Afghanistan, Azerbaijan, Turkmenistan
and Uzbekistan have experienced increases of 30–48 percent in GDP per capita
(ibid.). Nonetheless, in the absence of specific data, it is impossible to quantify the
exact contribution of the CAREC corridors to this growth.
PRA I had a sizeable effect on the GDP of some corridors: 1.65 percent in
Pucallpa, 1.90 in San Martín and 2.35 in Ayacucho (ibid.). However, its impact was
more visible on the corridor agricultural GDP, notably in Ayacucho, Cajamarca,
Pucallpa and San Martín, where PRA activities ranged from 4.5 to 8.7 percent of the
agricultural GDP.
For the remaining corridor programmes, Table 44 records the estimated GDP
gains. Indonesia estimates that by applying MP3EI, the annual national GDP
growth will be approximately 12.7 percent nationally, versus a 10.3 percent growth
in a business-as-usual (non-MP3EI) scenario. This signifies a 2.4 percent GDP gain
associated with the corridor programme. Internal growth within the corridor is
estimated at 12.9 percent, while growth in the areas outside the corridors would also
increase by 12.1 percent as a result of the spillover effects of corridor development
(CMEA, 2011).
Finally, BAGCI and SAGCOT plan to generate total incremental revenues per
annum worth US$1 875 and US$1 300 million, respectively. These increases repre-
sent GDP gains estimated at 12.9 percent in the case of Mozambique and 5.2 percent
in the Tanzanian corridor. More specifically, the BAGCI programme is projected
to generate US$1 billion of farming revenue annually, plus additional supply-chain
revenues in the order of US$0.5 billion (AgDevCo and InfraCo, 2010). The distribu-
tion of these direct benefits is consistent with the corridor business model that puts
smallholder farmers at centre stage. BAGCI is also expected to have major indirect
benefits for a broad section of the corridor population by inducing growth in other
sectors (e.g. construction, services and retail), which generate a multiplier effect.
Table 45 sets out order-of-magnitude estimates of the incremental direct and indirect
benefits, assuming that the Investment Blueprint is fully implemented by 2030.
Chapter 8 – Gains and pitfalls of agrocorridor initiatives 147
TABLE 45
Estimated benefits of BAGCI
Estimated benefits US$ million per annum
Gross on-farm revenue, including irrigated outgrower plots 1 000
Additional supply-chain revenues

500
(e.g. input supply, machinery leasing, transport)
Multiplier effects 375
Total incremental revenues associated with BAGC 1 875
Gross value added (wage income + return on capital + taxes) 750
Fiscal revenues to the Government of Mozambique 50
Source: AgDevCo and InfraCo, 2010.
Employment generation, as noted in Table 44, is also significant in the corridor

programmes for which there are data available. PRA I helped approximately 200
Peruvian SMEs (star connecting firms) generate close to 82 000 new jobs from 2000
through 2008. For the current PRA II, the goals set include creating 27 000 new
permanent jobs by the end of 2014.124
SAGCOT expects to create at least 420 000 new employment opportunities in
agriculture. In total, the programme seeks to lift 2.3 million people permanently
out of poverty through the creation of employment opportunities, as detailed
in Figure 30.
BAGCI sees employment creation as one of its main outcomes: 350 000 wage-
paying jobs, as noted in Table 46. While the first generation of BAGCI investments
seeks to ensure the access of smallholder farmers to profitable markets, the second-
or third-generation investments target job creation in upstream and downstream
linkages and SME development (World Bank, 2010). Table 46 disaggregates the
employment generation targets by direct and indirect effects and value-chain links.
As shown in Table 47, another important impact of corridors is the inducement
of private investments. The Table also gives the ratio of private investments induced
in the corridor to each US$ invested in the corridor programme. This ratio is highly
variable, from 1 to 0.45 in the PRA corridors, to 1 to 3.51 in Mozambique. This
depends mainly on two factors. The first is the type of private firm concerned:
mostly local SMEs in the PRA Project versus multinational agribusiness firms in
BAGCI and SAGCOT. The second is the type of investment mobilized: infrastruc-
ture investment (e.g. feeder roads and on-farm infrastructure that are among the
main items in the African and Indonesian corridors), versus productive investments
relating to agribusiness and agro-industry processes typical of the Peruvian corri-
dors (e.g. processing facilities and equipment for bixin, trout and dairy production).
Although there are no statistics available on private investments attracted to
the GMS and CAREC corridors, intra- and cross-subregion inflows of FDI to the
124
www.proyectopra.com [last accessed August 2013].
figure 30
Employment opportunities generated by SAGCOT
people
impacted
on-farm employment through
employment opportunities employment
opportunities in the wider opportunities
(including agricultural as direct or indirect
smallholder value chain beneficiaries
farmers)
140
thousands
+ 120
thousands
+ 160
thousands
+ 1.9
million
= 2.3
million
employment additional
opportunities beneficiaries
in agricultural from employment
processing in a household
Source: author’s elaboration based on SAGCOT, 2011.
corridors have increased significantly (Fujimura and Edmonds, 2008). For example,
FDI as a percentage of GDP grew from 2.5 percent in 2006 to 4.2 percent in 2010 in
the CAREC region, with Mongolia, the Kyrgyz Republic and Turkmenistan being
the most successful FDI destinations among CAREC countries.
The investments made in transport and trade facilitation and in the business
environment have resulted in a considerable reduction in business costs. The GMS
corridors have seen their transport efficiency improved, and their cross-border
delays reduced, together with informal payments at the border. These factors have
indirectly fostered the development of food and other manufacturing industries (e.g.
cement and mining) as well as tourism along the corridors. Several studies show that
average travel time on the corridors has been reduced by 40–50 percent, and so has
border-crossing time (ADB, 2008b; 2010a; 2010b; 2010c; 2010d). Average transport
and trade costs, understood as the aggregate cost of transport, transhipment, cus-
tom clearances and other border-crossing and transit fees, have notably declined,
although there is no overall estimate for all the GMS corridors. This cost reduction
benefits especially intra-GMS trade of agricultural products, and particularly of
vegetables, pulses, maize, rice, sugar, rubber and fresh fruit (ADB, 2008b).
TABLE 46
Estimated new employment generated by BAGCI
Total new employment Number of new jobs
Farming and processing 180 000
Additional supply-chain jobs 90 000
Additional jobs in other sectors (e.g. construction, services, retail) 80 000
Total incremental jobs associated with BAGC 350 000
Source: AgDevCo and InfraCo, 2010.

TABLE 47
Actual and estimated new investments triggered by the corridors
Budget of the corridor Private investments Ratio of private investments per US$
initiative (US$ million) (US$ million) invested in the corridor programme
BAGCI 386 1 356 1:3.51
CAREC 25 136 – –
GMS 7 428 – –
Indonesia 111 440 202 980 1:1.82
PRA 62 28 1:0.45
SAGCOT 1 270 2 100 1:1.65
Sources: AgDevCo and InfraCo, 2010; CAREC, 2010; 2012a; ADBI, 2010; CMEA, 2011; USAID, 2008a;
2008b; Milder et al., 2012.
Note: data registered in the Table exclude investments brought in by the private sector via PPPs.
Similarly, in the CAREC corridors in 2011 almost one hour was shaved off
border-crossing time, and costs to clear the border decreased by an average 16 per-
cent (CAREC, 2012). Furthermore, the average time required to start a business and
the cost of business start-up procedures have been cut in half from 2006 (31 days
and 26.6 percent of gross national income per capita, respectively) through 2010
(15 days and 10.8 percent) (ibid.).
Although it is too soon to assess the broader economic impacts of the PRA
Project’s PPP infrastructure component, some of the PRA-supported highway con-
cessions completed offer significant savings in terms of transport time and costs. For
example, in the Tarapoto-Yurimaguas segment of the IIRSA North highway, trans-
port costs have decreased by 44 percent, and transport time by 70 percent (USAID,
2008a; 2008b). Moreover, the estimated benefits of the port of Callao concession
could easily surpass US$2 billion in the initial three years of operation (ibid.).
An underlying objective of BAGCI is to improve trade and transportation
linkages (AgDevCo and InfraCo, 2010). Although no specific trade targets have
been set out in the blueprint, BAGCI intends to build further on the combination
of multimodal transport infrastructure and recently improved trade logistics that
have been increasingly positioning Mozambique as one of the sub-Saharan coun-
tries with the lowest costs of trading across borders. More precisely, according to
Domínguez-Torres and Briceño-Garmendia (2011) the costs of export and import
in Mozambique are about 60 percent of the sub-Saharan average, and the time
required to export and import is around 70 percent of the regional average.
Moreover, the corridors described have had a significant impact on regional
and international trade and on domestic sales. For instance, cumulative sales of
goods and services generated by the PRA Project are worth US$397 million (PRA
I: US$307 million and PRA II: US$90 million). About 47.8 percent of the addi-
tional sales generated in the first phase – US$146.8 million – were exports, while the
remaining 52.2 percent was channelled to the domestic market.
The GMS and CAREC corridors are also becoming a platform for boosting
trade flows, because of the growth and strengthening of regional institutions, and
the development of shared experiences and sense of community that increases trust,
as well as their ability to deliver jointly regional public goods and services. Total
GMS exports and imports grew 17.4 and 16.6 percent, respectively, from 2000 to
2009. Intraregional trade among the GMS countries in value terms has been dou-
bling almost every three to four years since 2000, with China seizing the lion’s share,
followed at a distance by Thailand and Viet Nam (ADB, 2012c). Intra-GMS trade is
now estimated at 30–50 percent of the area’s total trade (Shrestha and Chongvilai-
van, 2013). The size of intra-GMS trade increased at an average annual growth rate
of 21.7 percent between 2000 and 2009, from US$13.9 to US$81.2 billion (ADB,
2012f). However, this estimate excludes informal trade, which appears to account
for a significant share of intra-GMS trade, perhaps in the order of 20–30 percent of
total trade (ADB, 2007b). The composition of GMS5 exports varied. Cambodia, the
Lao People’s Democratic Republic and Myanmar increased their share of exports of
primary products, while Thailand and Viet Nam exported manufacturing products
(ibid.). Extra-GMS trade (i.e. GMS trade with the rest of Asia and the world) has
also augmented at double-digit rates since 2000 (ibid.).
Agricultural trade is growing among the GMS countries, through the GMS coun-
tries (especially for the landlocked Lao PDR), and with the rest of the world (mainly
Japan, EU and the United States of America) (ADB, 2012f). The exact amount of
intra-GMS agricultural trade is difficult to estimate, in part because of the high level
of informality enabled by the porous borders and the relatively small volumes of
agricultural products traded (ibid.). Similarly, there are no studies that document the
exact percentage of trade growth attributable to corridor development.
Even in the absence of exact data, the significant reductions in transport and
border crossing time and costs resulting from the GMS programme’s infrastructural
improvements and trade facilitation measures have definitely improved trade perfor-
mance. In particular, the increase in cross-border and intra-GMS agricultural trade is
expected to lead to greater cross-border investment, complementing trading activities
and involving cross-border production, agroprocessing and marketing tie-ups that
relieve raw material supply constraints, upgrade technology and improve capacity
utilization. The expansion in extra-GMS trade can also enable agribusiness com-
panies in the GMS corridors to link up with regional supply chains and networks.
Investments in agriculture and other anchor industries, and labour mobility among
the Mekong countries are also experiencing a wave of dynamism (ADB, 2012c).
In Central Asia, the establishment and upgrading of a network of six multi-
modal transport corridors of more than 80 000 km are providing greater access
to major external markets for trade to and from the region. The corridors are
expected to have a regional multiplier effect that could triple trade flows by 2017,
compared with 2006 (CAREC, 2010). For example, the Southern Transport Cor-
ridor Road Rehabilitation Project in the Kyrgyz Republic (part of CAREC Cor-
ridors 2, 3, and 5) has spurred trade between the Xinjiang Autonomous Region of
China and the Kyrgyz Republic, which grew annually by 13 percent from 2003 to
2010 (CAREC, 2012).
Most corridors have significant economic impacts on smallholder farmers. An
evaluation carried out in 2008 documented improvements in the GMS corridors
with regard to farmers’ incomes and diversification of income-generating activi-
ties, access to markets and credit, land ownership patterns and other issues (ADB,
2008b). For instance, surveys show that the income of farmers living along EWEC
rose by 20 percent because of the increase in selling volumes and prices received
after road completion (ADB, 2008a).
By assisting its clients, PRA I helped to improve the productivity and income
generation of more than 42 000 small producers and firms (beneficiaries) via the
long-term commercial linkages established. An estimated 43 percent of these ben-
eficiaries were very poor, i.e. earned less than US$1 per day (USAID, 2008a) and
37 percent were women (USAID, 2008b). Evidence of the PRA Project’s impact on
beneficiaries is available for some value chains and corridors. Artichoke producers
in the Mantaro Valley, for example, experienced an average net income increase of
30 percent; and in the Ayacucho corridor the PRA-assisted replacement of potatoes
by snow peas resulted in an additional US$351 in sales and 269 person-days of
employment per ha (USAID, 2008a; 2008b).
Finally, in the African corridors, growth of commercial agriculture on the
scale and in the manner inclusively and sustainably envisaged in the BAGCI and
SAGCOT blueprints would have a positive transformational impact on smallholder
farmers and rural communities. Consequently, BAGCI plans to generate US$1
billion of gross on-farm income (AgDevCo and InfraCo, 2010). Its main direct
benefits are higher and more predictable incomes for farmers and other chain actors
and increased employment opportunities for on-farm and off-farm labour, but also
capital income generated from investment and fiscal revenue accruing to the Mozam-
bican Government. Equally, the SAGCOT plan to mobilize US$3.4 billion of public
and private investment to “kick start” the region’s latent potential for commercial
agriculture is expected to contribute to the transformation of several thousand small-
holders into commercial farmers, with access to irrigation and weather insurance. As
a result, an annual value of additional farming revenues of US$1.2–1.3 billion will be
generated by 2030 (SAGCOT, 2011; Milder et al., 2012). Impacts on regional food
security are also anticipated thanks to some new 350 000 ha of land in profitable
production, serving regional and international markets. The resulting surge in cor-
ridor production is estimated at 630 000 tonnes of rice and 680 000 tonnes of other
grains, 4.4 million tonnes of sugar cane, 3 500 tonnes of red meat, and 32 000 tonnes
of fruit and vegetables (ibid.).
The corridor programmes have had other long-term impacts. For example, one
of the PRA Project’s most significant contributions – which goes even beyond
the actual and potential impacts highlighted above – lies in the development
of a second-generation PPP infrastructure model adapted to the Peruvian con-
text. This model includes state-of-the-art concession contracts, environmental
management tools and financial engineering. The importance of the model is its
applicability beyond PRA. For instance, after developing the concession scheme
for the port of Callao with PRA Project support, ProInversión decided to prepare
bidding documents to attract private companies to invest and operate in another
five Peruvian ports.125 The model is also being applied to numerous IIRSA infra-
structure initiatives.
125
www.proinversion.gob.pe [last accessed May 2013].
The PRA Project impacted not only on people but also on institutions. The
demonstration effect on the agribusiness sector and on governmental and develop-
ment initiatives was evident from the first phase. As of September 2008, 25 instances
of producer associations and firms had invested, following in the wake of PRA
pioneer clients, but without Project support. Similarly, at that time, 38 development
projects and NGOs, and 32 public instances had adapted the Project’s market-pull
methodology (USAID, 2008a; 2008b).
In the private sphere, the demonstration effect has been very important in vari-
ous agricultural value chains. For example, the Project introduced the production
of artichokes in the Junín corridor in 2002. The total artichoke production area in
the corridor went from none to almost 700 ha by the end of Phase I, of which only
half were PRA-supported. More growers, alerted by the attractive returns of fellow
farmers, decided to plant artichokes, without the assistance of the Project but taking
advantage of the presence of new buyers in the area. A similar pattern was observed
in the black-eye pea chain in the Piura corridor, where 400 ha were planted without
Project support out of 2 200 additional ha, and the number of processors increased
from one to seven, forming a regional bean cluster. Another example is the Ama-
ranth Road (amaranth or kiwicha is an Andean grain), linking Cusco, Abancay and
Andahuaylas. Only in Andahuaylas, 80 additional ha were planted without PRA
Project support, of a total of 340 ha in the zone (USAID, 2008a).
As discussed in previous sections, institutional instability and the changing
business and public environment introduced continuous modifications in the
PRA Project’s original format. However, the results achieved seem to indicate
that the programme has managed to weather the storms without slowing down
performance. The potential institutional risk involved in collaborating with mining
and other sector companies has not yet materialized. On the contrary, the private
partners have shared the PRA model and have proactively engaged in the promotion
of agribusiness development in their corridors. PRA II faces many challenges ahead
and particularly how to transfer the programme’s philosophy, methodologies and
tools to SIEX successfully. Being a privately managed initiative worked for the PRA
Project, but it is still to be seen whether the PRA model can be as highly performing
when managed by a public entity (ibid.).
The WEF model, although still at an early stage of development, also has poten-
tial to be adapted in other countries and applied to other sectors. In 2011, a number
of African leaders agreed to launch Grow Africa to support CAADP. Building on
SAGCOT, BAGCI and other models piloted by the New Vision for Agriculture,
Grow Africa can play a catalytic role in accelerating private sector investment and
expanding knowledge of best practices across Africa (Jenkins, 2012).
As important as economic sustainability is environmental sustainability. A
typical step in the design of corridors is an environmental assessment to gauge
environmental impacts and develop alternatives and mitigation options to guide
interventions and set priorities. For example, the GMS programme conducted a
transboundary, cross-sectoral strategic environmental assessment to support gov-
ernments in ensuring that economic corridors have the best possible impact on the
environment. Spatial modelling tools have been used to help locate and quantify the
environmental impacts geographically (both in terms of opportunities and risks) of
corridor development (Ramachandran and Linde, 2011).
SAGCOT went one step forward with its agricultural green growth strategy.
From 2010 to 2030, the implementation of this strategy will result in a net reduc-
tion of GHG emissions totalling nearly 30 million tonnes of CO2-equivalent,
worth almost US$300 million.126 More than 90 percent of these reductions are
associated with avoided deforestation, while the remainder results from increased
soil carbon127 and avoided emissions from agricultural practices. Avoided GHGs
associated with sustainable intensification of rice and livestock production were
not included in the model, because of data uncertainties, but could significantly
increase these estimates. The anticipated emissions reductions from the green
strategy could open the door to significant new financing from international carbon
markets and REDD+128 financing mechanisms (Milder et al., 2012). The SAGCOT
agricultural green growth strategy will also generate annual water savings of about
940 million m3 per year on irrigated land (Milder et al., 2012).
8.2 PITFALLS TO AVOID

The next paragraphs will flag some concerns derived from the incorrect design and
implementation of agrocorridor programmes. These concerns do not necessarily
refer to the six cases analysed in depth but could relate to other initiatives spot-
lighted during the initial mapping exercise. Corridor programmes do not always get
things right when it comes to promoting the type of agribusiness development that
reduces poverty and real food prices; creates employment; stimulates real wages;
improves food safety, quality and consumer choice; and takes into account social
and environmental considerations.
More specifically, corridor initiatives may face problems from design and imple-
mentation issues. The latter category encompasses problems concerning delivery of
the corridor programme and governance factors.
Some of the most frequent design problems include the following:
1. Devising an oversized programme that exceeds the financial and human
capacities of those responsible for corridor development. The Indonesian cor-
ridor programme has only been in operation for a few months so it is hard to
draw valid conclusions, but it runs the risk of being oversized. Concretely,
its design may not adequately reflect the human and fiscal capacities of local
governments to do their part of the corridor work.
2. Inducing the development of corridors starting from scratch instead of build-
ing on already existing agglomerations, as in the case of the Desert Develop-
ment Corridor in Egypt. Economic corridors should be developed in areas
where there is already economic density and potential that can be maximized,
126
At recent carbon prices of US$10 per tonne of CO2-equivalent (Milder et al., 2012).
127
See Glossary.
128
REDD is the UN Collaborative Programme on Reducing Emissions from Deforestation and
Forest Degradation (REDD) in developing countries. REDD+ goes beyond deforestation and forest
degradation, by incorporating the role of conservation, sustainable management of forests and
enhancement of forest carbon stocks. The REDD/REDD+ programme offers several financing options,
including market mechanisms, fund-based systems and their combination. For further information, see:
http://www.un-redd.org/AboutREDD/tabid/102614/Default.aspx [last accessed July 2013].
i.e. viable in areas with untapped growth potential. Conversely, blind support
to backward regions with little potential for economic growth and where eve-
rything needs to be developed is plainly objectionable.
3. Misaligning hard and soft interventions in the corridors. Corridor initiatives
do not always pay equal attention to hard and soft components – there is a
tendency to invest first in hard infrastructure, thinking that soft interventions
will logically follow. However, this is not the case since such alignment has to
be planned and prepared. Failure to do this (i.e. developing lacking connective
infrastructure without improving the business environment and investing in
transport and trade facilitation) gives way to a scenario in which returns on
investments are not maximized, and economies of scale are more difficult to
attain. The long experience of the GMS and CAREC programmes indicates
how long it takes in the real world to introduce soft interventions in a corridor
initiative. The design and planning of an effective hard-soft mix is challenging
because it requires intense capacity building and coordination skills to orches-
trate the participation of various actors, each with a vested interest in its own
part of the agenda.
4. Mistargeting is another common mistake. The selection of sectors, value chains,
crops and geographic areas ought to be guided by criteria of economic perfor-
mance and social and environmental sustainability. Sometimes, the wrong
areas, sectors and industries are selected on political grounds or dictated by
lobby and pressure groups. In other cases, the mistargeting is caused by inad-
equate appraisals based on wrong assumptions and insufficient evidence. The
targeting or selection process in the design of the corridor programme should
be carried out on the grounds of economic and technical feasibility studies
and preferably through some kind of multilevel and multistakeholder checks-
and-balances mechanism. For instance, Ambrosio-Albalá and Bastiaensen
(2010) suggest that there is a high risk of local governments being captured
by local groups and elites, which can lead to a failure to identify economies of
scale for delivering public services or a failure to deal with corridor spillovers.
This risk could be minimized by ensuring the active involvement of central
governments in the design, regulation and coordination of corridor initiatives.
In other cases, multinational agribusiness companies can exert excessive pres-
sure on governments and development partners to the point where they can
hijack the design of the corridor programme. A good measure to avoid this is
to invite domestic firms, producer federations and civil society to engage in the
corridor and counterbalance the influence of multinationals.
The right selection of growth centres, usually large urban areas, can do much to
stimulate regional development and integration. However, because of sheer dyna-
mism, there is a risk that these novel urban configurations do not necessarily feature
high on policy agendas. Recognizing the role of these urban centres, as the PRA
Project did with its “intermediate cities” theory, is key to spreading the economic,
spatial and infrastructural synergies of large cities geographically over an area within
the corridor vastly exceeding their current municipal boundaries.
5. Disregarding issues that, although vital for the success of the agricorridor,
require unpopular actions(s) that will not produce political gains, such as land
reform or corruption. For example, if the lack of security in land tenure dis-
courages potential investors and the design of the agricorridor programme fails
to tackle this critical issue, the corridor investment strategy will be unlikely to
be successful.
6. Neglecting the introduction of environmental, social and food security safe-
guards. The quest for sustainable spatial development entails ecological and
social aspects being harmonized with economic objectives. Therefore, cor-
ridor developers should ascertain whether the strategy to develop agribusiness
within the corridor contributes to maximizing the economic, social and envi-
ronmental benefits of the corridor for local communities.
Problems in implementation. As mentioned above, corridor implementers may face

problems related to the delivery of the strategy and to ensuring good governance.
Possible delivery problems when implementing an agrocorridor programme include
administrative and institutional shortcomings; lack of coordination at various levels;
and other issues related to the implementation of megaprojects. The most common
governance issue is the lack of or late reaction against a corridor’s negative side
effects on food security, communities and the environment.
Notionally, corridors pursue a hard-soft continuum that increases connectivity,
competitiveness and the sense of community. These are the three Cs that the GMS
programme aspires to achieve. This is, however, difficult in practice. Even in one of
the most advanced corridor experiences, the three Cs are often implemented in a
non-systemic way. For example, GMS countries have successfully implemented the
hard components of the corridor programme, such as roads and ports. Nonetheless,
the three Cs remain unmet without the softer components fully in place. Connectiv-
ity has been partially achieved, but could go much further. Competitiveness-wise,
GMS corridors are currently performing well in the global arena thanks to low
labour costs, but reliance on low wages is not a viable long-term strategy (Bafoil et
al., n.d.). To attain long-term competitiveness, the GMS region should strengthen the
implementation of soft elements that stimulate clustering and diversification of eco-
nomic activities. Political and cultural power barriers among GMS countries, which
are yet to be broken down, hinder the sense of community along the corridors.
The ADB-led model shows some institutional shortcomings. For instance,
there are some regional governance gaps. There are no proper multilateral struc-
tures of negotiations inside the GMS programme to accelerate the harmonization
time and the ratification of the agreements regulating the soft interventions (e.g.
transport and trade facilitation annexes) that complement the infrastructure. The
underlying problem is a gap in the delegation process of cross-border issues to
regional instances, given that the participating countries do not count on a com-
mon regulatory system nor share a common rights system (Bafoil et al., n.d.).
This gap could be a reflection of the diverse institutional paths of countries within
the Mekong and Central Asian regions. But it also signals the need for improved
governance structures that push for a systemic approach on soft issues in order to
foster priority economic activities, infrastructure connections and social structures
within the corridor (ibid.).
Furthermore, at national level, there is a local capacity deficit at the implementa-

tion stage. In particular, weak coordination among agencies involved in transport,
agriculture, trade and investment facilitation at both the central and local levels is
a major issue. Water-related issues, for example, often fall between the responsi-
bilities of the ministries for water, agriculture, urban development, energy and the
environment; land-use issues between those of the agriculture, forestry, energy, and
environment ministries at the national level, with multiple other stakeholders at the
provincial and district levels. The international system for development assistance
exacerbates matters, since it has its own parallel set of international agencies. This
fragmented institutional approach means that governments may not emphasize suf-
ficiently the highest priority resource opportunities in the corridors.
There is also a lack of connection between the higher levels and the operational
levels of national governments. These issues have contributed to problems and
delays in implementing agreements already adopted and ratified. The involvement
of local authorities and communities in developing the GMS and CAREC corridors
has been insufficient. Moreover, there is a glaring gap between the capacities of local
officials versus the planning and negotiation process that takes place at the ministe-
rial meetings (Bafoil and Ruiwen, 2010). The provision of an enabling environment
is not enough. In spite of the progress made, there is a lack of understanding at low
levels; lack of communication; lack of harmonization of rules; weak negotiation
processes; no education provision for the local personnel involved in the implemen-
tation; and lack of incentives at the national level to enforce corridor agreements.
Moreover, the increasing use of the PPP model in corridor strategies, as seen in
section 6.6, poses multiple challenges when it comes to implementation. Many of
the countries reviewed do not have adequate regulatory frameworks in place to gov-
ern public-private collaboration (in some cases, the only piece of legislation in place
is the general public contract law). Therefore, corridor partners may feel unprepared
to face the prevailing economic challenges (such as technical difficulties that drive
up the cost and thin domestic markets that limit revenue generation); social issues
(land acquisition and expropriation); and challenges derived from climate change
that reduce the interest of the private sector in infrastructure projects along the
corridor. Consequently, they fail to attract enough private expertise and investments
to finance, build, operate and maintain highways, ports and energy infrastructure
projects in the corridors in the long term.
The above situation makes the facilitation (through TA grants) of key PPP infra-
structure concessions a key ingredient of a corridor programme. A set of corridor
interventions can be designed to equip the national authorities with legal, regulatory
and procedural instruments that tackle the challenges mentioned above. The first
steps might be to identify critical regulatory reforms needed to facilitate meaningful
infrastructure PPPs, and to develop PPP-concession business schemes and trans-
actions step by step (design, structuring and implementation), or enhance those
already existing. For example, the competent national authorities can be retooled
to introduce innovative financial engineering schemes that improve the bankability
and attractiveness of infrastructure projects in the corridors and introduce safeguard
mechanisms to protect the public interest. Assistance can be directed to launching
innovations to ensure the climate proofing of corridor infrastructures developed
and managed through PPPs. It is also important to empower host governments so
that they are able to engage in international promotional campaigns to ensure the
participation of both national and international bidders. Finally, PPPs, being a fairly
new model, require changes in mindsets. For example, officials at the ministries
most relevant to the corridor system – agriculture, transport, energy, finance – are
unlikely ever to have dealt with a mechanism as complex as these partnerships. To
respond, they will need new skills and a more business-like approach.
Governance issues. Concerns of a social nature such as land tenure issues, exclusion
of economic actors and lack of equity or fairness, and an environmental nature – land
degradation, inadequate management of water resources and agro-industrial waste
– may emerge during the implementation of the corridor programme. Accordingly,
governance issues pertaining to inclusiveness, fairness and environmental concerns
stemming from agricultural corridor interventions need to be assessed.
The potential environmental problems derived from both infrastructure and
agro-industrial developments undertaken in economic corridors first need to be
established. Infrastructure projects of the magnitude and scope implemented in
the corridors, and the resulting increased mobility of people and goods, may trig-
ger faster exploitation of natural resources (land, water and soils). For example,
in the GMS corridors road upgrading and expansion led to deforestation and
biodiversity loss in some areas, because of the involuntary facilitation of logging
and transporting of timber. Similarly, augmented agro-industrial activity along the
economic corridors could lead to pollution and waste disposal issues. Land clearing
for agro-industrial and commercial purposes could also result in deforestation and
biodiversity loss (ADB, 2008a; ADB, 2011b). Intensifying agricultural production
for markets because of amplified demand and economic opportunities along the
corridors, may lead to undesirable environmental consequences if the required
increase in chemical and water use is poorly managed (Pingali, 2001).
Ensuring the social sustainability of corridors is equally vital. However, eco-
nomic corridor programmes can trigger up to four types of negative social impacts
on communities and vulnerable groups. These are: displacement of local communi-
ties and ethnic minorities, and poorly managed resettlement schemes; emergence of
vulnerabilities in the labour market of corridors; land grabbing; and exclusion from
value chains, and agriculture in general, of small-scale actors, such as farmers and
agribusiness SMEs.
For example, some GMS infrastructure projects have required the relocation and
resettlement of local inhabitants, causing changes in their socio-economic environ-
ment. The impact of this displacement can be particularly severe for marginalized
groups, such as small, remote rural communities and ethnic minorities. While
resettlement and compensation schemes usually complement major infrastructure
projects, they need to be better planned and implemented (ADB, 2010b). Further-
more, land prices around road construction sites tend to rise because of speculation
and expected increase in demand. This may cause small landowners to sell their
properties prematurely or they may be dispossessed of them, particularly in areas
where land rights are not properly defined or enforced (ibid.).
The dynamism of economic corridors can cause problems in the labour market.
For instance, the rapid growth experienced in the Mekong countries, partially
driven by the GMS corridor programme, has spawned vulnerabilities in the local
labour market (Shrestha and Chongvilaivan, 2013). Vulnerable employment con-

stitutes the major part of total employment in the subregion: 90 percent in the Lao
People’s Democratic Republic, 85 percent in Cambodia, 80 percent in Viet Nam and
55 percent in Thailand (ibid.). Safeguard measures should be put in place to prevent
and resolve such imbalances.
Host governments generally welcome FDI in agriculture in low- and middle-
income countries. Nevertheless, these investments are too often associated with
land grabs129 and their expected benefits to local development, poverty reduction
and food security fail to materialize (APRODEV, 2013). An increasing number
of land-grabbing episodes have been reported in the aftermath of the food and
financial crises of 2007 and 2008. These crises triggered a massive wave of large-
scale land investments in developing countries, fuelled not only by agribusiness
companies, but also by equity investors and pension funds seeking new asset classes
for investment. The race for acquiring land in developing countries has witnessed
several episodes where land investors were not fully respectful of local communi-
ties and of the land tenure regime of the host country. This sheds a suspicious light
over all such investments taking place in the developing world, including those in
agrocorridors. For instance, in several corridors studied, especially in Mozambique
and the United Republic of Tanzania, farmer organizations and civil society are
voicing their concerns over alleged land grabs by multinational companies from
the EU and the United States of America. Not only foreign investors are under the
spotlight. Land conflicts between large domestic investors and local communities,
in particular in horticulture, are common, and former political leaders have been
accused of grabbing large tracts of land. In response, corridor managers have taken
action to prevent land grabbing. First, local land banks130 have been established to
allocate land to investors following a consultation process with local governments
and communities. Second, corridor partners have agreed to follow worldwide-
recognized good investment principles, such as the Voluntary Guidelines on the
Responsible Governance of Tenure of Land. These are global land tenure agreements
with the potential to protect community rights in the face of possible land grabs
(FAO, 2012c).
Finally, the process of agro-industrial concentration fostered by the corridor
programme may lead to exclusionary practices that crowd out undercapitalized
domestic firms and farmers, enrichment of local urban elites at the expense of the
rural poor, and depletion or degradation of natural resources (Reardon and Barrett,
2000). There are important social considerations related to the scale of bioenergy-
related investments in corridors, where the risk of smallholder exclusion is consider-
able. This is particular crucial for ethanol production, which requires a large-scale
processing plant and production scheme, as opposed to biodiesel processing that can
be supplied from smallholder-based developments. Overall, there are several suc-
cessful examples from within the GMS of sustainable biofuel expansion involving
smallholder-based production of non-food crops and second-generation biofuels on
129
See Glossary.
130
See Glossary.
surplus land, which could be upscaled across the GMS corridors. However, experi-
ence from the region and elsewhere has shown that, if deployed unsustainably,
biofuel developments can be associated with numerous risks, particularly in terms
of food security, impacts on soil, water quality and availability, and biodiversity
(USAID, 2009).
The current investment pattern in the GMS corridors appears to favour large
plantations, which may lead to smallholder exclusion (ADB, 2007a). For example,
farmers engaged in small-scale jatropha developments in Yunnan, and corridor areas
in Myanmar and Viet Nam, are vulnerable to uncertainties and high-transaction
costs in processing and marketing (ADB, 2007a; Shepley et al., 2009). Similarly, the
predominant model in Cambodia and the Lao People’s Democratic Republic is a
concession that utilizes farmers only as daily wage labour and therefore may limit
inclusive growth in the long term (Malik et al., 2009).
161
Chapter 9
Guidance for making
economic corridors work
Acknowledging the complexity of the corridor approach, this chapter presents a

series of best practices and a checklist to guide policy-makers through the design
and implementation of agrocorridor programmes. These two elements are based on
evidence gathered through the analysis of the corridor cases, reinforced by a review
of relevant literature.
The section on best practices underscores important elements that could be
emulated and adapted in other corridor programmes elsewhere. The checklist offers
more systematic, step-by-step guidance on how to design and implement these pro-
grammes. The checklist does not detail items in the same way as the best practices
section. The high complementarity between the two sections is evident and calls for
a combined, integrated implementation approach.
9.1 BEST PRACTICES IN ECONOMIC CORRIDOR DESIGN

AND IMPLEMENTATION
The following paragraphs underline elements of best practice that may contribute
to successful corridor interventions. The list is not comprehensive since its goal is
rather to offer good examples and food for thought for policy-makers interested in
corridor initiatives. It also reinforces the findings and general messages expressed
throughout this study.
The main best practices identified are the following:
1. Find the optimal mix of hard-soft elements that optimizes corridor com-
petitiveness, particularly in the agribusiness sector. As tirelessly repeated in
the study, hard (infrastructure-related) investments on their own have the
potential to improve corridor performance only to a certain degree – it is only
when combined with soft elements that they can take a corridor to the next
level. More concretely, corridor interventions targeting the agricultural sector
should combine improvements to physical infrastructure (farm-to-market
roads, irrigation systems, collection points, market centres, agro-industrial
plants and warehouses); policy and regulations; human and institutional capac-
ity; and strategic agribusiness elements (e.g. farmer aggregation, farmer-market
linkages and access to finance) as essential enablers for inclusive transforma-
tional growth.
In the quest for an effective hard-soft continuum, corridor developers
should take into consideration all the key economic actors in the corridor:
inter alia, farmer organizations, logistics firms, multinational and large

domestic companies, and small-scale agribusinesses. Since the latter are often
overlooked in corridor planning, an example of corridor actions to support
agribusiness SMEs is offered specifically. Hard investments related to the
development of a SEZ that targets agribusiness SMEs should be accompanied,
for instance, by well-designed matching grants and training programmes,
with components on business planning, supplier networks, market informa-
tion, and product and process innovations. The combination of hard and soft
actions multiplies the chances to invigorate small agribusiness companies in
the corridor, and help them serve larger investments, expand their markets and
upgrade their capacity.
2. Mainstream the adoption of inclusive business models that empower small-

holder producers and SMEs into corridor tools. Corridor programmes can
deploy innovative business models to ensure that small-scale farmers and
agribusiness SMEs benefit and are empowered by corridor activity. This
inclusiveness approach may extend to women, youth and other vulnerable
population groups. Corridor developers can examine each corridor invest-
ment and intervention through an “engagement model” lens, i.e. how small-
holder farmers and SMEs are being linked to a particular corridor activity. For
example, smallholders can be directly employed, act only as land lessors or
take part in contract farming and outgrower schemes. The latter often include
arrangements that improve farmers’ access to financial services, seeds, agro-
chemicals and farming and post-harvest technologies. Such engagements are
at the core of the BAGCI, SAGCOT and PRA corridor initiatives. For these
programmes, the adoption of an inclusive business model is a sine qua non
condition for accessing corridor funds (e.g. catalytic financing in BAGCI and
SAGCOT) or services (PRA Project).
The corridor strategy can also promote the inclusion of support arrange-
ments for local agribusiness SMEs in business-to-business engagements with
multinational corporations. Through such arrangements, support can be chan-
nelled to agribusiness SMEs to enable their upgrading and modernization.
Since each investment is different, a one-size-fits-all approach to engage-
ment models is not justified. In given circumstances, some models will make
sense while others will not (WEF, 2013).
Ideally, the corridor governing body should make sure that the “right”
inclusive business models are identified and employed. Corridor centres may
play a key role in the facilitation and monitoring of the preferred models for
inclusive engagement. They could also reinforce them by providing essential
BDS as appropriate. Consultation with smallholders and SMEs will ensure
that they are informed about the proposed models, opportunities and potential
impacts, and have a voice and role in corridor investments. Any inclusive cor-
ridor must also ensure that women and youth are actively involved in decision-
making to shape projects and business models. The outcomes of these discus-
sions can be monitored, tracked and regularly reviewed to ensure that the
shared goals of small-scale farmers and firms, and large investors are achieved,
and that the overarching goal of inclusive sustainable growth is being met.
Chapter 9 – Guidance for making economic corridors work for the agricultural sector 163
3. Design for scale and mobilize the right “change agent”. Corridors are good
vehicles for piloting and testing new business and governance approaches but,
beyond that, they should be designed for scaling up to a transformative level.
Only interventions that incorporate a smart mix of strategic elements (pro-
ducer aggregation, market linkages and finance) and have clearly identified a
change agent (i.e. the entity that can act as a key driver in scaling the initiative
and establishing links to smallholders) are really upscalable (WEF, 2013).
Successfully designing for scale often involves identifying critical barriers in
the value chain, and discovering the change agent that is best placed to over-
come them. Based on this diagnosis, the corridor strategy will focus support
on these change agents.
Change agents can be found in different parts of the value chain. They
could be government extension agents or farmer groups. Nonetheless, in most
cases, they are what the PRA Project refers to as “star connecting firms”. They
can be, for example, large investors that have set up nucleus farms and receive
some corridor support in return for aggregating the produce of smallholder
farmers in their area/cluster and providing them with extension services and
inputs, as seen in SAGCOT. Change agents can also be seen on the off-take
and processing side of the agrifood chain, where agroprocessors, traders,
supermarkets and other entrepreneurs with networks of small-scale suppliers
manage to aggregate production and add value.
Scaling up can be undertaken in phases by, for example, leveraging exten-
sion workers in one agrobased cluster or agrifood chain at a time or on one
particular practice or issue. Another possibility is to launch a multiphase plan
that prioritizes support to different agrifood chains in consecutive waves, as
SAGCOT is set to do.
4. Ensure the availability of sustainable financing models and risk reduction

mechanisms able to attract more investment to the corridors. Innovative ancil-
lary financing tools and risk management instruments are critical ingredients
for corridor success. Corridor promoters can perform a diagnostic analysis of
the national financial system to identify existing gaps for agriculture-related
financing. They can also examine the particular agrifood chains and clusters
they plan to support to identify specific financing needs and how that financ-
ing can be best employed along the corridors. Once diagnosed, corridors can
incorporate in their programme financial tools that are tailor made to fit the
needs of smallholders and other intended beneficiaries. These tools can be low-
interest microloans; matching grants and weather and crop insurance products
at different points in the agrifood chain; financial products that deal with crop
seasonality; innovative payment platforms in rural areas; and patient capital
approaches, as required by the long-term horizon of agriculture development.
Upon the completion of this exercise, corridors can identify and engage with the
right organizations to define and deliver the exact types of financial and insur-
ance services required. This implies a search for the optimal financing mix from
financial institutions and donors that originally convene the corridor, or from
new private sources (such as banks and insurance companies) or other donors
(bilateral agencies, multilateral development banks and large foundations) called
to join in. Financial institutions should preferably be involved at an earlier stage

of a corridor’s strategy development and in the design phase of specific projects.
The corridor programme can either participate in, or lead, the provision
of the above instruments, or it can just facilitate access to them. For instance,
the BAGCI and SAGCOT Catalytic Funds are directly operated by the
programme, whereas the PRA Project acts as a facilitator that interacts with
financial institutions in the corridor (or attracts new ones to that area) to bring
them on board to offer improved services. Corridor authorities can, for exam-
ple, influence the supply-side of the financial market by making the business
case for banks to open new branches in the corridor (e.g. to serve agrobased
clusters). They can contribute to the financial engineering required to fit the
specific needs of selected agrifood chains (e.g. by preparing value-chain finan-
cial and insurance products). They can also improve the demand-side by dis-
seminating information about available products and conditions, by helping
farmers and SMEs to present bankable projects (e.g. prepare business plans)
and by granting guarantees.
5. Identify the most appropriate model for corridor governance and delivery
mechanism(s) to manage and implement the corridor programme and offer the
planned corridor services. Again, the aptness or otherwise of a given corridor
institutional model is very context specific: in some cases the establishment
of corridor centres presents itself as the optimal solution, while in others it
is more suitable to build upon existing structures and complement them with
coordinating mechanisms such as liaison officers, focal points or high-level
ministerial committees, depending on the circumstances. The model for cor-
ridor authority can be selected from various options. For example, the govern-
ance of the GMS corridor relies on a system formed by summits, conferences
and technical meetings, combined with a centralized corridor secretariat and
national focal points. In the PRA Project, the corridor authority is held by a
central manager, an outsourced private firm, which coordinates the various
corridor centres, whose management is equally outsourced to private firms,
NGOs and consortia. In addition, there could be several delivery mechanisms
operating concomitantly, each with a different function. For example, there
could be an overall corridor authority responsible for providing strategic
guidance and monitoring the delivery of the programme; Corridor Centres
in charge of delivering corridor services, as in the corridors of the United
Republic of Tanzania, Mozambique and Peru; Corridor Funds, either managed
internally or by an external entity, which provide financing and guarantees
to corridor beneficiaries (SAGCOT and BAGCI funds); and finally, Cor-
ridor Institutes and Observatories responsible for developing and dissemi-
nating information and studies on key corridor topics, such as the CAREC
Institute,131 the GMS Environment Operations Center132 or transport and
131
http://www.carecprogram.org/index.php?page=carec-institute [last accessed September 2013].
132
www.gms-eoc.org [last accessed September 2013].
trade observatories to monitor progress against trade and logistics targets and
perform the corresponding studies and surveys.
6. Promote multistakeholder governance mechanisms. Corridors offer advan-

tages for multiple stakeholders. Local companies can engage in corridors to
increase access to capital and non-financial business services, and to enlarge
their supply base, largely made up of smallholder producers. Global firms can
ensure alignment of their business and corporate social responsibility goals,
and open up new markets and supply sources. Farmers are the core target of
agrocorridor support, in terms of financial and business development assis-
tance. Public sector stakeholders can capture capital from private sources and
the international community – which is crucial in this era of limited public
funding for infrastructure and agribusiness development – to implement cor-
ridor initiatives to realize economic targets (increased investments, exports,
fiscal revenues, etc.) and social goals (e.g. employment generation, fair income
distribution and community strengthening) in a cost-effective manner. The
large number of corridor stakeholders, each with its own agenda and capaci-
ties, calls for advanced governance mechanisms to harness public, private, and
collective perspectives and interests in the corridor.
It is critical that such governance mechanism be propped up by high politi-
cal support (Harrison and Rodríguez-Clare, 2009), which will send investors a
clear signal about the government’s commitment to enforcing property rights,
ensuring the inclusion of the different stakeholders and enhancing the business
climate. This mechanism will be most effective if the nascent local civil society
and NGO community are involved in corridor operations and policy dialogue
to keep both the local government and agribusiness firms on the right track.
But more than anything it is essential to activate the engagement of private
actors in the corridor governance mechanism. This engagement can be in terms
of core partners as in the case of the PRA corridors and the partnership cor-
ridors in Mozambique and the United Republic of Tanzania. It can also adopt
the form of participation in corridor fora to encourage public-private policy
dialogue. Receiving feedback from the private sector is essential for improving
the operational environment for agribusinesses in the corridor.
7. Establish a strong mandate for intersectoral, multilevel and multistakeholder

coordination. Corridor planners should consider plans and priorities from
other sectors, through a well-designed process of information sharing and
coordination. For instance, if spatial priorities for irrigation development,
agro-industrial initiatives, wildlife habitat and hydropower generation in rural
areas are considered together, the corresponding water-related investment
projects could be better aligned and win-win solutions encouraged. To the
extent that such coordination requires modifying the modus operandi of the
ministries, high-level commitment to do so is crucial (Milder et al., 2012).
Corridor coordination goes beyond intersectoral action: multilevel pro-
cesses are in widespread use, for they respond to the complex web of relation-
ships among corridor stakeholders. The depth of this coordination structure
is proportional to the layers of administrative units involved. For example,
regional corridors require the establishment of a coordination framework

comprising not only national governments, but also regional integration stake-
holders (e.g. regional economic communities, regional industry organizations
and corridor authorities) and the development partners supporting regional
integration. Corridors taking place in an area within a single country stand in
need of coordination among central, regional, provincial and district govern-
ment agencies.
Also critical, however, is the need to include other stakeholders in the cor-
ridor dialogue, representing the private sector and civil society, at all those lev-
els. Multistakeholder partnerships such as the ones established in the African
corridors are an option to formalize coordination arrangements.
8. Ensure the provision of an adequate agribusiness environment. Stable macro-

economic environments and competitive farmer associations acting as input
suppliers for processors and traders are vital preconditions that need to be in
place for corridor initiatives to work.
Moreover, corridor programmes cannot function properly without the
right kind of legislation to govern and regulate efficiently enterprises and
other business concessions, and grant the rights to use and develop assets,
property and natural resources in an inclusive, sustainable manner. The scope
of actions to improve the business environment in the corridor must be tai-
lored so as to focus on relevant legal frameworks that govern infrastructure
PPPs and small-scale, often informal, agribusiness PPPs; contract farming and
outgrower arrangements; agrifood standards; land regulation; and other ele-
ments that contribute to lessening the cost of doing business in the corridor.
Regarding the latter, corridors can perform a business survey, along the lines
of the World Bank’s Investment Climate Assessment,133 to identify business
barriers in the corridor. A good way to address the business barriers identified
is to set up one-stop shops or provide assistance to increase the performance
of those already existing.
9. Take measures to avoid land grabbing and other land tenure problems. Cor-
ridor authorities are often in a position to influence and provide high-quality,
practical inputs to national land reform processes. However, more corridor-
specific actions to encourage ethical behaviour in (trans)national land deals
are often required. These include the adoption of responsible investment
guidelines and the establishment of land banks. SAGCOT has pushed for this
twin-track approach. The SAGCOT partners and G8 members involved in the
New Alliance for Food Security and Nutrition have confirmed their intention
to take account of the Voluntary Guidelines on the Responsible Governance
of Tenure of Land [...] adopted by the Committee on World Food Security
(FAO, 2012c), as well as the Principles for Responsible Agricultural Invest-
ment (PRAI) produced by FAO, IFAD, UNCTAD and the World Bank
133
www.wbginvestmentclimate.org [last accessed September 2013].
(FAO et al., 2010). In addition, they intend to develop joint pilot implementa-
tion programmes for the Voluntary Guidelines and the PRAI in the United
Republic of Tanzania (G8, 2012).
As seen previously, a land bank might be established to link investors to
suitable sites in the corridor in an efficient, transparent and equitable manner.
Land banks seem to operate best when professionally maintained. This way,
investors do not need to search for land as part of the business development
process, thus reducing their financial risk and costs. Situations in which plan-
ners face conflicts of interest and communities in planning and negotiation pro-
cesses – some of which are coercive – can also be averted (Milder et al., 2012).
10. Devise green growth or environmental strategies for the corridor. Corridor
plans are increasingly based on the belief that environmental sustainability
and economic growth are not only compatible, but should be integrated. The
Southern Corridor of Tanzania has made an explicit commitment to advance
the practice of green growth; the GMS corridors are also progressively
embracing this model.
The first step towards green growth is to conduct an environmental assessment
in order to identify effective approaches to maintain the quality of ecosystems,
mitigate climate change and ensure access to clean energy and water in the cor-
ridors, among other issues. One essential element in the pursuit of green growth
corridors is the inclusion in the masterplan of measures to ensure that major
investments in transport and agriculture are realized sustainably (Ramachandran
and Linde, 2011). Accordingly, the corridor investment programme should
incorporate agriculture green growth practices to position the corridor as a place
that attracts “best in class” investors and innovators willing to integrate environ-
mental sustainability into their business plans (Milder et al., 2012).
Agrocorridors can use a variety of approaches to measure and track pro-
gress on green growth. One option is to embed in the masterplan explicit
guidelines and smart targets for environmental sustainability in activities and
investments, and scrupulously adhere to them. This can be done for the corri-
dor programme as a whole, and for each individual agrifood chain, cluster/SEZ
and investment project. The corridor plan can develop its own framework or
make use of well-tested, groundbreaking initiatives such as the Field to Market
or the Sustainable Agriculture Initiative Platform.134
9.2 CHECKLIST TO GUIDE THE DESIGN AND IMPLEMENTATION OF AN

(AGRO-)ECONOMIC CORRIDOR
The checklist that follows has been structured according to the framework for
economic corridors proposed in section 3.6. It considers the life cycle of the cor-
ridor, so that it covers the planning process that confers an effective direction to the
corridor, and the implementation process that emphasizes the delivery at scale and
tracks performance to introduce adjustments in the corridor strategy as appropriate.
134
www.fieldtomarket.org; www.saiplatform.org [last accessed September 2013].
1. Defining the corridor strategy and roadmap

Conduct preparatory work. Examples include the following.
-- Identify potential change agents.
-- Perform value-chain and feasibility analyses for selected agricultural chains.
-- Analyse the competitiveness of existing agrobased clusters – by applying,
for instance, the “competitive diamond model” (see Porter’s work [1998])
– to benchmark their performance and growth potential.
-- Identify key transport and trade bottlenecks and conduct feasibility and
environmental impact studies for the related infrastructure investments.
-- Prepare detailed analyses of the types of hydrologic and watershed
management that can ensure adequate water availability for wildlife
habitat, tourism and domestic uses, as well as sustain water flows for
irrigation (Milder et al., 2012).
-- Run a survey on business climate in the corridor.
-- Execute a stakeholder and institutional mapping for the corridor.
-- Prepare a diagram of existing policies (cross-referencing to relevant poli-
cies) and identify bottlenecks.
-- Assess the country legislation to see whether there is already in place
a legal framework and enforcement system regarding PPPs, contract
farming, agrifood standards, an overview of megaprojects/corridors and
other issues that influence the business climate (World Bank, 2010). This
exercise comprises not only outlining the relevant legal framework – and
ensuring commitment to it – but also reflecting upon whether the cor-
ridor intends to go further than the law in developing good practice, e.g.
by adopting voluntary standards, guidelines and codes of practice.
Prepare a corridor masterplan or blueprint.
-- Define the corridor vision.
-- Ensure that this vision relates to the outcomes of the corridor programme.
-- Agree on the corridor strategy: star connecting firm versus targeting of
(sub)sectors/value chains/clusters.
-- Select the governance model that better suits the specific context and
circumstances of the corridor.
-- Document the vision, approach, development strategy, and workplan and
governance model for the corridor programme.
-- Launch a roadmap for stakeholders.
Ensure the presence of strategic elements of agricultural initiatives
(associativity, market linkages and access to finance and appropriate
technologies) during the design phase of the corridor programmes and in
each of their individual investments and activities.
Make sure that the corridor plan strikes a balance between the different goals
being served (e.g. competitiveness of the agricultural sector, food safety, food
security and the adoption of climate-friendly practices). Ensure that the
interaction between agriculture and other sectors, such as renewable energy,
tourism or mining, is also factored into the plan.
Plan the corridor programme in a way that it is ready for scalability from the
start. Identifying and activating change agents, sequencing plans and leveraging
stakeholder capacities in new ways are essential actions to accomplish this.
Ensure that corridor initiatives have top political support, and are monitored
directly from the office of the president, highly influential ministers or
high-level coordinating committees.
Verify that the design of the corridor programme guards against “ownership
gaps” at either the local, national or regional levels.
Incorporate good practices such as inclusive business models that empower
smallholder farmers, good investment and land tenure principles, innovative
financing and green growth practices.
Adopt an explicit focus on engaging and working closely with small-scale
farmers and firms, women and youth, and ensure that they are actively
involved in decision-making to shape projects and new business models.
-- Consider offering definitions of each vulnerable group identified in the
inclusion policy.
-- Make sure that corridor resources are deployed to maximize inclusion
outcomes.
-- Foster a community-driven, decision-making process involving all stake-
holders to ensure that the rights of these vulnerable groups are protected.
Make sure that the corridor masterplan reflects the policy framework
within the corridor and identify key issues for policy dialogue and action.
2. Engaging and activating key stakeholders

Align stakeholders around a shared vision.
-- Communicate the vision, scope, objectives, benefits and impacts of the
corridor programme to all stakeholders involved and/or impacted.
-- Consult the stakeholders concerned to make sure that the content of the
vision and strategy is acceptable to them.
-- Jointly define stakeholders’ accountabilities and responsibilities.
Prepare a (formal) stakeholder agreement delineating what each stakeholder
has agreed to do.
Value the role of partnerships to break new ground in engaging and
aligning stakeholders around shared priorities to mobilize investment and
collaboration in corridors and key agricultural chains.
Send a call to action to other potential national stakeholders and the global
community to participate in the corridor initiative.
[For corridors led by the private sector and/or the international community.]
Foster the engagement of governments to strengthen national plans, enhance
policies to improve the enabling environment for domestic and international
agriculture-related investment, increase investment in agriculture-related
infrastructure and programmes in the corridor, and incentivize environmental
sustainability and inclusive development.
[For corridors led by the public sector and/or the international community.]
Mobilize the private sector to increase agriculture sector-related investment
with an emphasis on developing sustainable, innovative and smallholder-
inclusive business models.
Activate farmers to organize cooperatively to improve access to market oppor-
tunities, financing and training programmes, and actively engage in corridor
programmes and advocacy to influence the direction and impact of the corridor.
Expand the participation of civil society to implement community-level

capacity-building programmes, monitor programmes to ensure alignment
with public-interest goals and proven practices, and engage key stakeholder
groups and the public.
Mobilize donor agencies and international organizations to support the
strengthening of governmental delivery capacity, leverage catalytic and
innovative forms of financing, and facilitate measurement, evaluation and
knowledge exchange.
3. Programme targeting: area, sector, value chain, product and firm

Identify the key objective(s) that will guide the targeting, e.g. increase the
competitiveness of the agricultural sector and enhance food security.
Apply additional criteria, supplementing those highlighted above with
cross-cutting themes such as poverty reduction, women’s empowerment,
environmental management and employment creation.
Select geographic areas with the reduction of transaction costs for the
acquisition of inputs and services specific to the agribusiness activities
to be promoted, such as agrochemicals, machinery or logistics-related
services as their main criterion. This usually implies clustering around
growth areas with functional electricity, transportation and communication
infrastructure that effectively links agribusinesses to key suppliers, such as
producer associations. The reduction of transaction costs achieved in these
areas can be more influential on investor decisions than fiscal incentives,
such as tax holidays (FAO, 2013).
[For corridors following a strategy based on targeting core sectors, etc.]
Give priority to high economic impact sectors. Look for subsectors and
value chains with perceived competitive advantage, perceptions of high
impact on rural incomes and employment, and export market potential or
import substitution.
-- Check that these subsectors or value chains have private sector appeal, i.e.
that they are already a focus of the private sector, or that they have a high
likelihood of attracting FDI and private domestic investment.
-- Take into account in the programme design the complexity of agri-
culture value chains, which comprise many stakeholders with highly
diverse interests.
-- Base the selection on the value-chain/cluster analysis and feasibility
studies performed to verify soundness and identify business/invest-
ment opportunities.
[For corridors following a “star firm” strategy.] Prepare a set of criteria for
selecting “star firms” that will receive support, as part of the “change agent”
strategy of the corridor.
Develop detailed analytical methods for spatially targeting sustainable
investments where they are most needed and stand to deliver the greatest
socio-economic and ecological benefits (Milder et al., 2012).
4. Preparing a corridor development matrix

Establish a core set of priority projects in the corridor areas where there is
demonstrated private and local public sector commitment and ownership
(World Bank, 2010).
Gather input for and prepare a sustainable finance pipeline with emphasis
on the investment portfolio (Milder et al., 2012). The portfolio will be
constituted by bankable infrastructure and agribusiness projects, to be
financed through unilateral and multilateral initiatives. The preparation of
the portfolio requires the identification of opportunities across the agrifood
chains/clusters and engagement of the right groups and organizations to
participate in these opportunities, with incentives to motivate them. It also
entails carrying out a thorough assessment of the growth potential of the
corridor. This can include the following:
-- A framework for the selection of priority areas and projects.
-- A results framework for evaluating outcomes and assessing the benefits
and costs of implementing a corridor strategy. Long-term targets can be
determined for corridor countries, for instance, for sustainable agricul-
tural yield improvements, adoption of improved production technologies
(e.g. improved seed varieties and post-harvest management practices),
and measures to ensure social inclusion and ecological sustainability and
safeguard agrobiodiversity.
-- A timeline for the proposed interventions, and estimation of available
public, donor and private sector financing.
Review the portfolio of initiatives to ensure that the necessary strategic
elements mentioned earlier (associativity, market linkages and access
to finance and appropriate technologies) are integrated into the overall
programme and specific activities.
Define effectiveness measures to decide which firms to support and which
projects to implement.
Undertake, as part of the corridor’s portfolio or investment generation
programme, an identification and screening process to select candidate
companies and proactively approach them to explore investment
opportunities in the corridors. A starting-point would be to approach
major international commodity round tables (for sugar, soybeans, beef
and biomaterials) to identify industry leaders on sustainable production135
(Milder et al., 2012).
5. Financial and risk management

Devise tailor-made innovative financing mechanisms that fill the gaps
identified in the corridor.
135
These round tables include the Better Sugar Cane Initiative (Bonsucro – www.bettersugar.org);
the Round Table on Responsible Soy (www.responsiblesoy.org); the Global Roundtable for
Sustainable Beef (www.sustainablelivestock.org); and the Roundtable on Sustainable Biomaterials
(http://rsb.epfl.ch) [last accessed May 2013].
Identify and engage the right organizations to deliver the above financial
products. If the path chosen is to set up a corridor body responsible for this
delivery, choose the most appropriate model and initiate its establishment.
Establish investment guidelines to help steer investors towards socially
responsible and agriculture green growth practices with broad social and
environmental benefits. These investment guidelines would enhance, but
not duplicate, environmental and social safeguards put in place through
other mechanisms (e.g. SAGCOT).
Accelerate the availability and adoption of agricultural index insurance in
the corridor, in order to mitigate risks to farmers, especially smallholders
and women farmers, and increase income and nutritional security.
Complete corridor agricultural risk assessment strategies, with the mandate
of identifying key risks to food and nutrition security and agribusiness
development and recommending options for managing these risks.
Ensure that there is adequate fiscal margin for the public investments
required and place emphasis on the due diligence work of the Central Bank.
Minimize the risk of major infrastructure projects by selecting partners for
joint ventures with proven expertise and a solid financial background.
Strengthen social and environmental safeguards management, including
bolstering the capacity of the staff of the corridor authority and corridor
partners (particularly the public sector) to conduct better environmental
impact assessments.
Implement a single coherent process for identifying lands suitable for
agriculture or forestry investment, for example, by establishing land
banks and voluntary guidelines.
Devise strategies to minimize risks involved in the concentration of
resources in the corridor (as a typical megaproject). For example, it is
important to monitor and enhance the health of the adjacent landscape,
upon which the long-term value of corridors depends.
6. Soft interventions in agriculture and related sectors

Use a structured approach to break the strategy into manageable soft
components.
Encourage contract farming/outgrower schemes with new investors through
corridor centres that could train and support smallholder farmers to
connect to large-scale investments and facilitate investment in agribusiness
facilities and technologies (irrigation, post-harvest, agroprocessing, etc.),
among others.
Carry out investment promotion activities within the corridor by
undertaking the following:
-- Making information on the investment portfolio available to potential
investors using the designated channels: a dedicated Corridor Investment
Promotion Centre, IPAs, the Agribusiness Unit of the Ministry of Agri-
culture, the Ministry of Commerce, etc.
-- Designing and putting in place a communications strategy for showcasing
the specific investment opportunities identified in the investment genera-
tion portfolio/programme to potential business and financial investors.
-- Programming fora and roadshows for corridor-based business leaders

and public sector representatives to meet investors for sustainable invest-
ment funds, and international agricultural and forestry companies previ-
ously identified as socially and environmentally responsible investors.
-- Convening events on financing sustainable investments for country- and
region-based banks, donors, investment groups and international com-
modity round tables to showcase opportunities to scale up successful
businesses in the agrocorridor.
-- Developing a pipeline of investable smallholder-based projects in col-
laboration with private investors, coupled with actions to strengthen
the managerial and technical capacities of individual farmers and their
organizations to help them be “investment ready” (Milder et al., 2012).
Implement interventions planned to support value-chain, cluster and SEZ
development, paying particular attention to those in border areas when the
main objective of the corridor is regional integration.
Design and implement a programme to ease the burden on businesses,
focusing on issues identified by a survey.
Provide support to SME development in agribusiness and ancillary
industries, as well as the development of small manufacturers and medium-
size exporters within a corridor.
Scale up differentiated agricultural markets for the corridor under profitable
sustainable production through certified or differentiated value chains (Milder
et al., 2012).
Implement the activities envisaged in the masterplan vis-à-vis human
resource development. Support the establishment or strengthening of
strategic agricultural and food technical schools, universities, R&D centres
and other providers of relevant training.
Assess the need for strengthening/reforming customs and transport
authorities (World Bank, 2010) and for harmonizing customs procedures.
Align corridor, urban, national and regional policies to avoid major
development imbalances across regions.
Harmonize trade and transport regulations and standards that are relevant
for corridors that have a binational or multinational scope.
Set up a corridor data and analysis facility for supporting the integrated
development process, by maintaining and using information on agriculture,
environment and economic development.
-- Ensure that the facility includes a component of spatial data, with techni-
cal expertise to run geographic information systems (GIS).
-- Hire a cadre of professional planning facilitators to run planning and
monitoring processes at village, district, provincial and corridor levels.
-- Provide additional training and backstopping as needed.
-- Put in place mechanisms for ensuring that relevant data do not remain
siloed in different institutions and sectors.
Develop and advance “business as unusual” solutions that contribute to achieve
environmental sustainability/green growth. Explore, for example, the potential
demand and development options for ecofriendly and climate-friendly prod-
uct labelling for corridor producers and businesses (Milder et al., 2012).
Develop revenue management strategies to prepare for the increase in

revenues from corridor industries.
7. Hard-side interventions
Execute planned infrastructure investments along the corridor using the
preferred governance models (e.g. direct implementation and infrastructure
PPPs), and applying international best practices for developing and
managing transport and trade corridors. See, for example, Arnold, Olivier
and Arvis (2005) and Arnold (2006).
Ensure that the development of the corridor transport axis is complemented
with adequate rural infrastructure development to support access to
markets and corridor widening.
Enhance the environmental and social regulatory framework applicable to
connective, energy and last-mile infrastructure and strengthen the national/
corridor capacity to enforce compliance and apply sanctions for non-
compliance.
Implement logistics programmes, with active industry participation through
platforms and fora.
Strengthen existing mechanisms for modelling road toll and port revenues
based on applicable fiscal provisions; for the collection and auditing of such
revenues; and for interagency coordination.
Implement mechanisms for information sharing, transparency and
accountability, including eventual publication of revenues and possibly
infrastructure PPP/concession contracts.

Set up a corridor governing body, development authority or task force
responsible for the planning, coordination, promotion and facilitation of
corridor interventions and investment projects.
-- Study whether this authority or task force could be embedded within an
existing agency or with enhanced collaboration between existing agen-
cies, rather than establishing yet another public institution.
-- Analyse whether the governing body is representative of the local com-
munity.
-- Study the convenience of bringing various public agencies that support
rural and commercial agriculture together under one roof or establishing
coordinating committees.
-- Establish a land bank and/or a local task force that monitor the reset-
tlement of local communities and liaise with social programmes linked
to such resettlement.
Consider establishing an advisory board of independent agribusiness
development professionals and institutions.
Take a proactive approach to cooperate with and support local authorities
in the implementation of the corridor roadmap.
Find a balance between the authority’s executive powers and broad support
from the various stakeholders.
Build sufficient coordination capacity as corridor initiatives develop,

as a key to aligning stakeholder involvement, providing a responsive
process for partners and investors and ensuring delivery on the corridor
programme goals.
-- Establish a strong mandate for intersectoral coordination, as well as coor-
dination between central and decentralized public bodies.
-- Set up procedures to manage interdependencies effectively with other
programmes and systems.
-- Put in place adequate procedures for corridor coordination and status
reporting.
Consider the scope for and sustainability of the following:
-- Vocational training institutes tailored to produce skilled labour for the
new investors and suppliers.
-- Specialized centres to provide BDS in the corridor (if different from the
corridor authority).
-- Corridor institute or organization to disseminate information, exchange
good practices and lessons learned.
-- Corridor observatories to monitor various topics such as transport and
trade performance or green growth targets.
-- Consider the convenience of using PPP models in the establishment of
these institutions.
Set up effective corridor institutional structures to liaise with private
stakeholders such as business fora, corridor-based logistics associations or
linkages via Chambers of Commerce.
Set up effective corridor institutional structures to liaise with relevant
regional integration schemes.
9. Strengthening implementation capacity

Provide appropriate training and support for corridor stakeholders to
implement the corridor roadmap.
-- Provide adequate time for orientation and training of local and central
government staff participating in the corridor programme.
-- Identify the focal points for each critical area with the necessary skills and
competence and reach agreement for their participation in the programme.
-- Make certain that more attention is paid to building the capacities of the
weakest links in the corridors, which are likely to be producer organiza-
tions and SMEs.
Identify culture and change management requirements to implement the
corridor roadmap and act on them.
10. Monitoring progress and refining corridor strategies

Develop an M&E system to supervise and track progress against the
corridor targets over time, and correct as needed.
-- Develop an evaluation framework and methodology for the investment
strategy and implementation plan that can be used to sustain multi-
stakeholder engagement in the corridor and individual clusters (Milder
et al., 2012).
-- Set up milestone deliverables and their respective target dates.

-- Verify that the M&E system is able to track change in the corridor across
multiple landscape dimensions, such as sustainable productivity, employ-
ment, ecological integrity, livelihoods, food security and institutional
capacity (Milder et al., 2012).
-- Make sure that the corridor programme uses tracking and data profiling
to inform future planning for corridor improvement, and incorporate
measurements and feedback mechanisms in tracking component progress
and refine impact estimating techniques.
Establish a process to monitor corridor risks and make provisions to
reassess the risks associated with the corridors at the various stages of
programme implementation.
Establish mechanisms to share experiences and lessons learned across
corridors to develop and refine effective approaches. These abilities become
even more important as corridor initiatives move towards scale.
Convene regular meetings to drive and track corridor implementation, and
report to partners on progress towards achieving commitments, including
those made by the private sector.
Hold regular and transparent discussions to evaluate progress. This will
ensure solutions are found when needed, and help keep the right amount of
focus on performance and sustainability.
Set up mechanisms for ensuring that smallholder producers and SMEs
contribute to the evaluation process and are aware of the findings of the same.
177
Chapter 10
Conclusions
This chapter has been kept purposely short because comprehensive and detailed
conclusions and recommendations have already been presented in Chapter 9.
10.1 GENERAL CONCLUSIONS

Many initiatives are taking place in low- and middle-income countries to foster the
development of economic corridors in parallel with, and on the basis of transport
infrastructure and trade routes. These corridor initiatives help improve physical
connectivity and generate economies of scale in selected sectors, while working
to strengthen inclusive markets through broader improvements to the enabling
environment. Precisely, this integration between hard and soft investments is the
hallmark of economic corridors.
Corridor programmes seek to ensure the complementarity of these two types of
investments, strike a balance between them, and find the right sequencing (simul-
taneous versus consecutive implementation) to generate high synergies. However,
soft and hard interventions have associated substantially different financial com-
mitments. Infrastructure improvements require financial commitments estimated
at over 0.5 percent of corridor GDP. Software interventions, on the other hand,
do not have significant fiscal impact, but rather require political capital, specialized
technical capacity for implementation and an enabling environment and institu-
tional framework.
Economic corridors are variable in scope, ranging from an area within a country
to a regional grouping of countries. In both cases, the main goal of the corridor
initiative is to develop the targeted area economically, but regional corridors have
an added dimension: the harness of regional integration. Consequently, regional
corridors are vital to deepen and help materialize regional integration agreements
in a specific territory, as in the case of GMS and ASEAN. They are also pivotal to
smooth the transition from centrally planned to market-driven economies (CAREC
and GMS), to strengthen the weakest links of the region, e.g. the Lao People’s
Democratic Republic, Cambodia and Myanmar in the GMS, and to transmute
“landlocked” into “landlinked” countries (CAREC countries and the Lao PDR in
the GMS programme).
Agriculture is typically one of the sectors targeted in economic corridor initia-
tives in developing and emerging countries. This is a reflection of the importance of
agriculture for food security and the national economy in terms of GDP contribu-
tion, exports and employment generation. It is also an expression of the increasing
interest of multinational agribusiness companies in developing economies. But
instead of taking countries as the unit for the benchmarking exercise that will lead
to an investment decision, multinational agribusinesses are starting to think about
non-conventional market groupings such as corridors in order to build critical mass

and drive higher returns more quickly.
Corporations wishing to invest in primary agriculture, stimulated by the high
prices of agricultural commodities in the past years, may perceive agrocorridors as
a suitable location with available fertile land and favourable policy and operational
environments. Other agribusinesses looking for new markets for their products
and services may see agrocorridors in developing and emerging nations as attractive
markets. Corridors are likely to provide the kind of scale that can make them com-
mercially attractive. So, for instance, while to an agribusiness company the United
Republic of Tanzania and the broader East African region may look daunting in
terms of market development, SAGCOT may represent a good-size dynamic mar-
ket. Besides its own attractiveness, the corridor may serve as an advantageous entry
point, from which to expand to the rest of the country and region.
Agrocorridors are also appealing for domestic agribusiness firms because they
offer not only a critical mass of potential consumers (farmers and firms clustered
in growth hubs), but also a more enabling business environment than the rest of
the country. Another factor that attracts national companies is the provision of
subsidized financial products and BDS to corridor investors. Furthermore, corridor
programmes typically increase the effective demand for agribusiness goods and
services by smallholder farmers, who would not be able to afford them without the
corridor support package.
The appeal of agrocorridors could be such that agribusiness firms may convene
or join multistakeholder partnerships for developing a corridor. This is the case of
the multinational companies, members of the WEF’s New Vision for Agriculture
initiative, which became partners in the SAGCOT and BAGCI partnerships. It
could also be that private firms, both national and international from other sectors
decide to support corridor programmes as part of their CSR strategy, as in Peru.
Governments may see in the corridor model a vehicle for better focusing their
resources in areas of high growth potential (corridors, and clusters and SEZ within
them), while creating synergies between hardware and software infrastructure. The
public sector finds it easier to align the work of various ministries (ranging from
portfolios of finance, transport and public works, customs and immigration to quar-
antine and agriculture) and decentralized governments around a common roadmap
for corridor development. Moreover, a corridor roadmap, aligned to national plans
and strategies, provides the basis for negotiating with and engaging donors and
other development partners, and for coordinating their interventions.
Similarly, for the international community an agrocorridor is a highly systematic
model to foster agricultural and economic development in general. Not only does
this approach make it simpler to coordinate investments, align interventions and
mobilize additional support, but it also offers an opportunity to pilot and test
new models at scale. Clearly, delivering new development models at scale presents
multiple challenges and requires sustained high-level commitment from all corridor
partners for several years.
Regional economic corridors require impetus and assistance from regional
organizations to sustain the momentum created by strong country-level political
support, and vice versa. The multiplicity of countries, agreements and players
involved amounts to a challenge of coordination. Moreover, decentralization pro-
Chapter 10 – Conclusions 179
cesses are ongoing and extremely important in developing regions, so the interaction
between central and federal or regional governments within each country has to
be added to the formula. Without mutual support between national and regional
organizations, it would be difficult to face the complexity of inter-institutional
implementation and the need for standardized and harmonized, and yet innovative
corridor execution and financing models.
Motivated by these reasons, some of the actors mentioned have teamed up to
promote agribusiness development through six economic corridors, as shown
throughout these pages. These corridors have been fostered by different lead con-
veners or actors that have shaped four distinct corridor models. As could not be
otherwise, the four models analysed have diverse strategies, stakeholders, objectives,
engagement and governance models, as well as corridor programme components.
Nevertheless, they also have much in common for they share the basic principles of
agrocorridor development.
The approach used in characterizing these agrocorridor models has been to
deconstruct them along the lines of the core factors that have been defined in theory
as key to the contribution of corridor performance. These factors are, inter alia,
public policy, investment incentives, infrastructure, labour performance (through
human resources development) and regional and global integration. This decon-
struction has been captured through the establishment of monographs of corridor
characteristics, understanding the (core) developer, the development phases of the
corridors and the nature of corridor institutions such as corridor authorities, centres
and funds. A tailor-made framework for analysis has been applied to ensure the
systematic, coherent comparison across the cases. The framework looks at the com-
parative advantage of each corridor, the extent of its connectivity and infrastructure,
its composition of firms and farmers, the soft interventions deployed to develop the
agribusiness opportunities, its supported agrifood chains, and the specific processes
and tools used for planning and implementing the corridor programme. This analy-
sis has culminated in implications on governance, impacts on local, national and
regional development, and finally the sustainability of these corridors.
The study of the cases reveals that corridor programmes come in all shapes and sizes.
Some are multicountry, multicorridor and multisectoral, while others deal with a single
country, corridor and sector. Obviously, this wide variability is also observed in the
budget and target for induced investments attributable to each corridor intervention.
An important element of differentiation among the six cases studied is the way
they approach the agribusiness sector. Some corridor programmes have been cre-
ated with the sole purpose of contributing to agribusiness development; others have
agriculture as one of several core sectors they support. Finally, agribusiness can be
a second-tier sector that corridor programmes deal with in an ad hoc manner, when
specific initiatives for joint action are identified and agreed upon.
Each approach may yield a different outcome, but each has the potential to
impact the agribusiness sector in a substantial, positive manner. Long-lasting gains
in agricultural and total GDP have been observed, incremental jobs have been
created along the agrifood chain and ancillary industries and services, agricultural
exports have steadily increased and farmers’ income have risen. In particular, the
impacts of agrocorridors in terms of employment generation are noteworthy. As
highlighted in Chapter 9, incremental jobs are created not only on farm but also off
farm, mostly in the agroprocessing sector, but also in other stages of the agricul-
tural value chain. Indirect effects on employment in other sectors are also far from
being negligible. Furthermore, the emphasis of many agrocorridor programmes on
inclusive and socially responsible engagement models will likely have long-lasting
positive effects on the income levels of small-scale farmers and agribusiness firms.
The impressive positive impacts of agrocorridor programmes can blind us to the
existence of some negative effects, such as land tenure issues, environmental degra-
dation, overuse of water resources and the exclusion of small-scale actors. To avoid
the emergence of these issues, social and environmental safeguards can be built into
the corridor masterplan. Some of these safeguards might seek to reduce the market
asymmetry of information and bargaining power between the farmers and their
suppliers and buyers, which are often multinational agribusiness companies. Other
safeguards will try to address the potential negative externalities associated with
agricultural intensification. Further social safeguards are broader in scope, such as
enabling communities to sustain themselves, protect their land rights and create
favourable ecoenvironmental conditions in the corridor area where they live.
To shield the agrocorridor programme against the potential poor design, imple-
mentation and governance issues underscored in Chapter 9, guidance is provided for
those concerned with corridor/agribusiness development. A two-pronged approach
is followed: a best practices summary and a checklist are offered to be used in com-
bination. The main goal of these guidance elements is to maximize the potential of
the corridor plan to yield positive outcomes (triple bottom line of economic, social
and environmental effects) and minimize the likelihood of negative outcomes.
10.2 LOOKING FORWARD: IMPLICATIONS AND SUGGESTIONS

FOR FUTURE STUDIES
This study has provided a detailed account of six economic corridors in developing
countries that target agricultural sector development. It has highlighted the inter-
ests, objectives and means of the various corridor stakeholders towards local devel-
opment and regional integration. Being long-term, complex megaprojects, many of
the economic corridors are still at their early stages, which means that there is still
time for evaluation to provide a feedback platform that informs a more strategic
approach to policy and practice on the future of (agro-) economic corridors.
Development is a process with successes and failures along the way. Some
failures, however, can be minimized and corrected if more rigorous monitoring
arrangements are in place. This is particularly important in the face of potential
negative externalities that may emerge during the implementation of agrocorridor
programmes. Again, the appearance of negative effects should be closely monitored
so as to avoid a point of no return in the future.
A follow-up on the impacts of the various engagement and governance models
used by agrocorridors in developing countries is also advisable. New models are
emerging so fast that more time is needed to allow the ongoing processes of trial-
and-error experimentation to stabilize, so that the lessons drawn from agrocorridor
initiatives can be fine-tuned and expanded. While waiting for time to generate hard
evidence, policy-makers and practitioners can lend a watchful eye to the evolution of
governance and market structures affecting agrocorridors, so that they may reward
smallholder inclusion as well as environmentally responsible corporate practices.
181
Annex 1
Glossary
Agribusiness
Agribusiness is a broad concept that covers input suppliers, agroprocessors, trad-
ers, exporters and retailers. Agro-industry broadly refers to the establishment
of enterprises and supply chains for developing, transforming and distributing
specific inputs and products in the agricultural sector. Agro-industry refers to
the establishment of enterprises and supply chains for developing, transforming
and distributing specific inputs and products in the agricultural sector. (Source:
FAOTERM.) For the sake of simplification, these two terms are considered
interchangeable in this document.
Agricultural extension
“Agricultural extension provides non-formal agriculturally related continuing
adult education for multiple audiences: farmers, spouses, youth, community, urban
horticulturalists (continuing agricultural education and community development)
and for various purposes (including agricultural development, community resource
development, group promotion and cooperative organizational development)”
(FAO, 2001; p. 9).
Agricultural value chains

Agricultural value chains “comprise a set of actors who conduct a linked sequence
of value-adding activities involved in bringing a product from its raw material stage
to the final consumer”, i.e. from farm to fork (Miller and Jones, 2010; p. xv). These
value chains encompass activities that take place at the farm level (or before, such
as input supply) and off farm (handling, processing and distribution). The term
“value” refers to the fact that as agricultural products move through the successive
stages, transactions between chain actors take place, and value is progressively
added (FAO, 2007). Support services and the “rules of the game” (laws, regulations,
policies and other institutional elements) are also part of the chain concept (ibid.).
Biofuel (ethanol and biodiesel)

Both ethanol and biodiesel are biofuels. The former is an alcohol product pro-
duced from corn, sorghum, potatoes, wheat, sugar cane and even biomass such as
cornstalks and vegetable waste. Biodiesel, on the other hand, can be made from
soybeans, sunflowers, oil palm, jatropha or other oil crops.
Second-generation biofuels are produced from cellulose, hemicellulose, or lignin
(ADB, 2007a), while first-generation biofuels are primarily derived from food
crops, such as grain (corn, wheat, etc.), sugar cane for bioethanol, and oilseeds (such
as palm oil) for biodiesel production.
Block farming
Block farming is a farming system in which groups of smallholder farmers join
together to farm large tracts under the guidance of a technical supervisor in order
to minimize labour, input and extension costs (Milder et al., 2012). In this specific
case, the term refers to farm blocks under irrigation that are leased to commercial
and smallholder producers (AgDevCo and InfraCo, 2010).
Breadbasket (project/intervention)
A breadbasket project consists of the priority development of an area or region with
the potential for providing most of the food for a country. The Cerrado region of
Brazil and the northeast region of Thailand are two examples of successful bread-
basket corridor programmes in the developing world, carried out by two relatively
backward and landlocked agricultural regions in otherwise dynamic nations (World
Bank, 2009b). They have developed at a rapid pace and have become leading agricul-
tural exporters, through investing in large connective infrastructure and large dams,
agricultural research, and soil recuperation in well-defined corridor areas (World
Bank, 2009b).
Brownfield investments
Brownfield investments entail the expansion of existing ventures. Greenfield invest-
ments, on the other hand, are ventures that finance new physical facilities for a
business in a location where no existing facilities are currently present.
Catalytic financing
Catalytic financing is long-term capital to support companies and organizations to
undertake project development (in this case, of sustainable agriculture projects) that
can be taken to scale.
Contract farming
Contract farming is an agricultural production system carried out according to an
agreement between a buyer and farmers. The agreement establishes conditions for
the production and marketing of a farm product or products (FAO, 2012d). An out-
grower scheme is a system under which small-scale farmers (outgrowers) produce
crops for sale to a specific purchaser, usually an agricultural processing operation or
nearby large-scale farm. Frequently, the outgrowers receive training, extension and
input supplies to help improve product quantity and quality (Milder et al., 2012).
Dry port
A dry port is a facility that provides services for the handling and temporary storage
of containers, general and/or bulk cargoes that access the dry port by any mode
of transport such as road, railways, inland waterways or airports. (Source: www.
unescap.org [last accessed July 2013].)
Dutch disease
The Economist (1977, pp. 82–83) coined this term in relation to the role of natural
gas in the Dutch economy following the oil crisis of 1973. It referred to the fact that
the rise in natural resource exports (gas in the case of the Netherlands) can cause an
Annex 1 – Glossary 183
appreciation of the national currency, which might trigger a divergence in develop-

ment between the tradable and the non-tradable sectors.
Economic integration
Economic integration is often defined as the abolition of the various restraints of
trade between nations. However, in this report economic integration refers not only
to the concept of free trade areas, but also to more advanced processes of integra-
tion that have more to do with economic convergence and catching-up processes.
There are several levels of economic integration: (i) free trade area with no tariffs
against members and individual tariffs against outsiders (e.g. the North American
Free Trade Area [NAFTA] and the European Free Trade Area [EFTA]); (ii) customs
union (no tariffs against members, common tariff against outsiders, e.g. the Andean
Group and Caribbean Community and Common Market [CARICOM]); (iii) com-
mon market (a customs union without limitations on factor mobility, such as the
European Union); and (iv) complete economic integration (unification of monetary,
fiscal, social and counter-cyclical policies).
Freight forwarding
Freight forwarding is a service used by firms that deal in international trade. Instead
of directly handling the transportation of their products, which can involve a
multitude of carriers, requirements and legalities, these firms can hire a “freight for-
warder” to act as an intermediary between them and various transportation services.
Global services
Global services are those necessary for companies competing on the world
market, such as easy access to global destinations for passengers and freight (in
particular airborne services), and the existence of advanced services supporting
international finance and market development. Other services include those in the
field of marketing and information and communication technology, and human
resources development to obtain a workforce with sufficient skills for meeting
international requirements.
Governance
The term “governance”is linked to the work of Williamson (1975; 1985) and other
new institutional economists, who state that institutions matter in many ways that
are pertinent for industrial organization, economic development and other fields
of social sciences. The institutional perspective encompasses two levels of analysis.
The first level is broader in scope and deals with the institutional environment or
“rules of the game” (or environment in which the institutional actors are embed-
ded). The second level is more focused on the microanalytic level pertaining to the
“institutions of governance”, which operate at the level of individual transactions,
and include markets, hybrids (mixed governance structure composed of hierarchic
and market elements) and hierarchies (i.e. a governance structure, with a ruling
body of clergy organized into orders or ranks each subordinate to the one above
it) (Williamson, 1973). Using this second, narrower sense, each mode of governance
has associated transaction costs; thus, taking the institutional environment as given,
economic agents align transactions with governance structures to effect economiz-
ing outcomes. Hence, a governance structure is “an institutional framework in

which [the integrity of] a transaction, or related set of transactions, is decided”
(Williamson, 1996; p. 11).
Hardware (investment/interventions)
Hard components or investments refer to public spending aimed at developing
material infrastructure. “Hardware” concerns operations that enhance the connec-
tivity of national infrastructure investments (in transport, energy and communica-
tions) and associated regulatory frameworks to sustainable trade and investment
integration corridors, with the goal of reducing cross-border transaction costs,
boosting external competitiveness through productive integration, and promoting
balanced territorial development” (IaDB, 2011).
(Investment) greenprint
An investment “greenprint” can be defined as an investment framework to stimulate
“green growth”, i.e. growth that respects the environment and uses natural resources
adequately. Agriculture green growth is an approach for attracting and coordinating
investment in agricultural production, processing and distribution that is efficient,
profitable, sustainable and resilient to climate change (Milder et al., 2012).
Land bank
Land banks consist of general land available for investments, as determined by local
land-use plans, where investors can pick available areas in which to invest (Theting
and Brekke, 2010).
Land grabbing
Land grabbing is the transfer of rights to large areas (over 200 ha) of agricultural
land from local communities to foreign or domestic investors under false pretences
and questionable contracts, and occasionally with clear breaches of traditional rights
to land (Theting and Brekke, 2010; EC, 2013). Such land grabs typically involve
limited consultation with local communities, limited compensation, and a lack of
regard for environmental sustainability and equitable access to, or control over,
water resources.
Last-mile infrastructure
This concept refers to infrastructure that links smallholders and local communities into
the network, such as feeder roads, power and irrigation connections to the farmgate.
Market thickness
In agglomeration economics, “market thickness” refers to the effective number
of firms in a given market; thus, a thicker market indicates that more transactions
of a homogeneous good take place in a unit of time (Lippman and McCall, 1986).
Conversely, “thin markets” have a low number of buyers and sellers, and transac-
tions are scant; thus, they are less liquid and more volatile (since the few trades that
take place can affect prices significantly). The term “market thickness” has a long
history in the study of financial markets and commodity exchanges (Telser, 1981),
particularly in finance microstructure literature under the term “liquidity” (Lipp-
Annex 1 – Glossary 185
man and McCall, 1986), and in the transactions cost literature. See, for example, the
literature review in Hubbard (2001).
Matching grant
This type of grant encourages applicants to provide matching contributions in
cash or in kind, e.g. personnel time or assets. Consequently, the facility operates
on a co-investment basis, pairing up with national sponsors to create investment
opportunities to attract private investors.
Meta-trends
System-wide developments arising from the simultaneous occurrence of a number
of independent social, economic and technological trends.
One-stop shop
A one-stop shop relates to the ability of providing a comprehensive selection of goods
or services at a single location. The rationale of a one-stop shop or centre is to provide
a convenient, efficient and comprehensive selection of services to targeted clients.
Patient capital
Patient capital can be defined as equity funding with return requirements that are
delayed in time or lower in profitability than normal commercial thresholds (EC,
2004). In the context of the Beira Agricultural Growth Corridor (BAGC), it refers
to long-term, low-cost, subordinated capital to develop on-farm infrastructure,
mostly funded by development partners, such as bilateral donors, multilateral
development banks and large foundations (AgDevCo, 2010).
Public goods
Public goods are investments that deliver significant collective benefits but are not
profitable in their own right.
Public-private partnerships (PPPs)

PPPs are collaborative agreements between the government and the private sec-
tor regarding the provision of a public good or service. Such partnerships are
characterized by the sharing of investment, risk, knowledge, responsibility and
reward between the partners. PPP Units or Agencies are entities whose main goal
is to facilitate, promote and monitor PPPs. PPPs for infrastructure development
are commonplace in many countries around the world, but more recently this
arrangement has come into focus as a potential mechanism to further sustainable
agricultural development objectives. Hereinafter, such a partnership will be referred
to as an agribusiness PPP. Agribusiness PPPs may have several advantages, such as
bringing needed capital to public projects and lessening the risks inherent in doing
business in agriculture.
Smart subsidies
Smart subsidies are those characterized by being transparent (and designed to mini-
mize scope for political interference and administrative allocation), target-effective,
cost-effective, cost-efficient and non-distortionary (World Bank, 1998).
Subsistence, emergent and commercial farmer

Subsistence farmer Emergent farmer Commercial farmer
Agricultural method used Traditional Traditional/modern Modern
Agricultural products for: Self-consumption Self-consumption/sale Sale
Income Nil – low Low–medium Medium–high
Software (investment/interventions)
Investments in soft components (policy and regulatory coordination) mean public
or development funding that prepares the ground for “hard” investments (physical
integration), for example by improving governance, developing human resources and
business capacity, building a fostering enabling environment and strengthening rel-
evant organizations (Streeck and Mertens, 2011). Software refers to “operations that
support policy reforms, regulatory upgrades, institutional strengthening and capac-
ity development needed to facilitate the movement of goods, services, capital, people
and technology across borders, with the goal of promoting a better integration of
country systems and private operators into the global economy” (IaDB, 2011).
Soil carbon sequestration

“Soil carbon sequestration” or increasing the storage of carbon in the soil is the pro-
cess of transferring carbon dioxide (CO2) from the atmosphere into the soil through
crop residues and other organic solids, and in a form that is not immediately re-
emitted (OSU, n.d.). It helps to slow down rising atmospheric CO2 concentrations.
Trade facilitation measures

Trade facilitation measures are those that encourage the efficient flow of goods
and services across borders by focusing on the rationalization, standardization and
harmonization of trade-related procedures (UNCTAD, 2011).
Transformative investment
A “transformative investment” is characterized by its catalytic nature and ability to
impact on markets and people, beyond its chronological and geographic scope (Katz
and Wagner, 2008).
Value-chain finance
Value-chain finance refers to “the financial flows to those actors from both within
the value chain and financial flows to those actors from the outside as a result of
their being linked within a value chain” (Miller and Jones, 2010; p. xv).
187
Annex 2
Economic corridors identified
No. Region Corridor name Countries involved
1 Africa Maputo Development Corridor Mozambique and South Africa
2 Africa Coast-to-Coast Corridor Mozambique, Swaziland, South Africa,

Botswana and Namibia
3 Africa Nacala Corridor Mozambique, Malawi and Zambia
4 Africa Beira Agricultural Growth Corridor Mozambique
5 Africa Southern Agricultural Growth Corridor United Republic of Tanzania, Zambia

of Tanzania and Malawi
6 Africa North-South Corridor South Africa, Zimbabwe and Zambia
7 Africa Northern Corridor Kenya, Uganda, Burundi, Rwanda and

Democratic Republic of the Congo (DRC)
8 Africa Central Corridor United Republic of Tanzania, Burundi, DRC,

Rwanda and Uganda
9 Africa The Greater Cairo Region corridors: Egypt

1) Cairo-Suez
2) Cairo-Alexandria
3) Cairo-Ismaïlia
10 Africa Greater Ibadan Lagos Accra (GILA) Corridor Benin, Ghana, Nigeria and Togo
11 Africa Gauteng City Region Corridor South Africa
12 Africa Dakar-Touba Corridor Senegal
13 Africa Abidjan-Ouagadougou Corridor Côte d’Ivoire and Burkina Faso
14 Africa Lamu Growth Corridor Ethiopia, Kenya and South Sudan
15 Asia North-South Economic Corridor (Greater China, Myanmar, Lao People’s Democratic
Mekong Subregion [GMS programme]) Republic (Lao PDR) and Thailand
16 Asia East-West Economic Corridor Myanmar, Thailand, Lao PDR and Viet Nam
(GMS programme)
17 Asia Southern Economic Corridor Viet Nam, Cambodia and Thailand

(GMS programme)
18 Asia Central Asia Regional Economic Afghanistan, Azerbaijan, China (Xinjiang

Cooperation Corridors (CAREC) province), Kazakhstan, the Kyrgyz Republic,
Mongolia, Pakistan, Tajikistan, Turkmenistan
and Uzbekistan
19 Asia Mekong-India Economic Corridor India, Thailand, Cambodia, Myanmar

and Viet Nam
20 Asia Indonesian corridors: Indonesia

Sumatra Economic Corridor
Java Economic Corridor
Kalimantan Economic Corridor
Sulawesi Economic Corridor
Bali-Nusa Tenggara Economic Corridor
Papua-Kepulauan Maluku
Economic Corridor
21 Asia East Coast Economic Region Corridor Malaysia
22 Asia Micro Enterprise Development Initiative Armenia

Corridors
23 Asia Azerbaijan Business Assistance Azerbaijan

and Development Corridors:
Guba Economic Corridor
Lenkoran Economic Corridor
Agstafa Economic Corridor
Zagatala Economic Corridor
24 Latin The Initiative for the Integration of Argentina, Plurinational State of Bolivia,
America Regional Infrastructure in South America Brazil, Chile, Colombia, Ecuador, Guyana,
(IIRSA) Corridors: Paraguay, Peru, Suriname, Uruguay
and Bolivarian Republic of Venezuela
11) Andean Corridor
12) South Andean Corridor
13) Capricorn Corridor
14) Paraguay-Parana Waterway Corridor
15) Amazon Corridor
16) Guyanese Shield Corridor
17) Southern Corridor
18) Central Interoceanic Corridor
19) Mercosur-Chile Corridor
20) Peru-Brazil-Bolivia Corridor
25 Latin Mesoamerican or Pacific Belize, Costa Rica, El Salvador, Guatemala,

America Integration Corridor Honduras, Nicaragua, Panama, Colombia,
Mexico and the Dominican Republic
26 Latin Caribbean Corridor

America
27 Latin Poverty Reduction and Alleviation (PRA) Peru

America Corridors in Peru
28 Latin Subnational Corridors Bolivia

America
29 Latin Subnational Corridors Guatemala

America
30 Latin Subnational Corridors Honduras

America
Annex 2 – Economic corridors identified 189
31 Latin Subnational Corridors Paraguay

America
32 Latin Soybean Export Corridors Argentina

America
33 Latin Sugar-cane Ethanol Export Corridors Brazil

America
191
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Agribusiness
and Food
Industries
Series
4
Developing countries are increasingly using agrocorridors to develop

their agricultural sectors. These corridors promote inclusive agribusiness
growth, building on a linear agglomeration of people and activities
along existing transportation infrastructure.
Based on initiatives in Central Asia, the Greater Mekong Subregion,
Indonesia, Mozambique, Peru and the United Republic of Tanzania,
this report shows how agrocorridors help improve physical connectivity
and functioning of markets, while generating economies of scale
in agriculture. Agrocorridors do this because they integrate public
and private investments in “hardware” (transport and agribusiness
infrastructure), “software” (policy and regulatory framework) and
“orgware” (institutional strengthening and capacity building).
The goal of the book is to provide policy-makers and practitioners with
a series of evidence-based, practical instruments (a checklist and a good
practices tool) to guide the design and implementation of agrocorridors.
Food and Agriculture Organization of the United Nations (FAO)

Viale delle Terme di Caracalla, 00153 Rome, Italy
www.fao.org
ISBN 978-92-5-108636-0 ISSN 2304-5191
9 7 8 9 2 5 1 0 8 6 3 6 0
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ISSN 2304-5191

Making economic corridors work

Making economic corridors work

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

The designations employed and the presentation of material in this information

FAO information products are available on the FAO website (www.fao.org/publications)

About the author xiv

6. Economic corridors currently supported by the PRA Project 45

11. Summary of corridors analysed 39

Several years ago, I had the privilege of working in a groundbreaking economic

Eva Gálvez Nogales

Developing countries are increasingly using agrocorridors to develop their agricultural

About the author

ABAD Azerbaijan Business Assistance and Development

CGIAR Consultative Group on International Agricultural Research

GoT Government of the United Republic of Tanzania

PIDA Programme for Infrastructure Development in Africa

UNASUR Union of South American Nations

1.1 BACKGROUND AND SCOPE

1.2 OBJECTIVE OF THE STUDY

1.4 STRUCTURE OF THE STUDY

2.1 SPATIAL DEVELOPMENT INITIATIVES

Governments launch SDIs in an effort to develop dynamic zones of sub/supraregional or

Economic Integrated Supranational (might Multi- Coupling infrastructure

Agrobased Network Regional or provincial Single sector Benefits

Source: author’s elaboration.

2.2 DEFINITION OF ECONOMIC CORRIDORS AND RELATED CONCEPTS

The defining feature of corridors is the linear agglomeration of economic activities

Stage 1 [...] Stage 5

Source: author’s elaboration based on ADB, 2011c.

2.3 TYPES OF ECONOMIC CORRIDORS

Geographic scope  Urban corridor vs urban-rural corridor

Sectoral scope  Monosectoral corridor (e.g. agriculture and transport)

Driver  Public-led corridor

Source: author’s elaboration.

energy, telecommunications and agricultural-supporting infrastructure). Most

2.4 THEORETICAL FOUNDATIONS OF ECONOMIC CORRIDORS

In an effort to answer this question, much of the debate on territorial devel-

Unevenness. The processes of economic growth and integration develop unevenly

Self-reinforcement. Economic growth is self-reinforcing due to a process of “circular

Neighbourhood effect. Economic growth is affected by the neighbourhood effect,

A new paradigm of territorial development. The dominant approach for foster-

2.5 CORRIDORS AND OTHER TERRITORIAL-BASED APPROACHES

A sixth trend could be added, pertaining to the renewed emphasis on sustainability,

1990 2009 1990 2009 1990 2009

developing countries is to create an Agribusiness Unit within the Ministry of Agri-

Chapters 3 to 7 describe a series of economic corridor initiatives in developing

3.1 INTRODUCTION TO THE MAPPING AND SELECTION EXERCISE

3.2 AFRICAN CORRIDORS AND THEIR POLICY BACKGROUND

Abidjan-Ouagadougou Corridor Côte d’Ivoire and Burkina Faso No

BAGC Mozambique Yes

Central Corridor United Republic of Tanzania, Burundi, Democratic No

Coast-to-Coast Corridor Mozambique, Swaziland, South Africa, Botswana No

Dakar-Touba Corridor Senegal No

Gauteng City Region Corridor South Africa No

Greater Ibadan Lagos Accra Benin, Ghana, Nigeria and Togo No

Lamu Growth Corridor Ethiopia, Kenya and South Sudan No

Maputo Development Corridor Mozambique and South Africa No

Nacala Corridor Mozambique, Malawi and Zambia No

Geographic scope Urban corridor vs urban-rural corridor

Sectoral scope Monosectoral corridor (e.g. agriculture and transport)

Driver Public-led corridor

Regional trade blocs Union of South American Nations (UNASUR)

Regional agricultural policy/body Central American Agricultural Council (CAC)

Regional transport integration Initiative for the Integration of Regional Infrastructure

Regional Regional cooperative agreements: Intergovernmental Agreements on the