The Complex Political Economy of Trade Corridors
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regulation. Transport is trapped in equilibrium, where a transit system is optimized for certain types of traders and service operators and cannot evolve toward a system compatible with the requirements of global logistics networks, which could then link the country to international markets. While changing the behavior of all the key agents in the vicious cycle at once is utopic, targeted changes are still possible. A “virtuous circle” can be facilitated by providing incentives for compliance and quality that will enable progressive emergence of compliant behaviors, quality services, trust, and friendly control and regulation.
Transit Corridors: A History of Public-Private Partnership with Mutual Benefits Overland transit trade has a history as long as trade itself. Current concepts and procedures developed much before the industrial revolution. Over their long history, trade corridors, notably in Eurasia, have faced much the same challenges as those in developing countries today. Changes in speed or technology, despite their huge impact of trade costs, did not radically change the functions of agents, customs, or transport and brokerage companies, nor their relationships with each other, nor the risk of rent-seeking and misgovernance. The main lesson from history is that an effective transit system is based on the search for mutual benefit between operators, traders, and regulators. Multilateralism in the 20th century may have shifted the attention to the concept of freedom of transit and the development of international law, but it did not alter the paradigm that transit systems should be based on publicprivate partnership between the transit operators and the country of transit.
Evolution of Cooperation, and Customs Ancient empires (China, India, Persia, Rome) were confronted with the need to organize the movement of goods within and between provinces (De Laet 1949; Asakura 2005). For instance, in China, long-distance trade was not impeded by internal taxes; transit documents have been found that guarantee “safe conduct” for goods moving along waterways. From an Indian kingdom in the fifth century BC, there is evidence of internal transit systems from the border to the markets in the capital city, similar to modern systems, with bonds and seals for customs transit. The Roman customs and transit systems have been extensively documented. The portorium was a tax collected ad valorem on trade from the border of the Roman-controlled territory and also between the provinces, which were separate customs and fiscal territories. Goods