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Poor Places, Thriving People
governorates around Sana’a. In the Islamic Republic of Iran, the ostan of Qom lies just to the south of Tehran. There will be many other lagging areas with the potential to benefit from spillovers, which could be picked up by higher-detail country-level analysis. But for a lagging area to benefit from proximity to a leading area, it has to be well connected by infrastructure. In Indonesia, it has been shown that the spillover effect extends for 60 kilometers when roads are good and only 25 kilometers when they are poor (World Bank 2009a, 76). The growth of low-income areas around Jakarta in Indonesia, Seoul in the Republic of Korea, and São Paulo in Brazil followed the path of major transport axes (World Bank 2009a, 77). But the same could apply, on a smaller scale, to the agricultural track between a hamlet and the nearest weekly village market, or the dirt road between a village and the nearest market town. Investment in rural infrastructure, including rural roads, was found to be one of the main factors that determined how well a region of India fared in reducing poverty (Datt and Ravallion 1998). About a sixth of the Lao People’s Democratic Republic’s poverty reduction from 1997–98 to 2002–03 was attributable to rural roads (Warr 2005). “Spillover connectivity” is different from long-distance connectivity. Spillover connectivity integrates a place into its nearest economic hub so that it can build economic links and share economies of agglomeration. The impact of spillover connectivity is, therefore, unambiguously positive. Long-distance connectivity, in contrast, allows finished goods to be sold in distant markets. Improving long-distance connectivity in lagging areas can therefore be either positive or negative for lagging areas. On the positive side, it improves their access to markets. But on the negative side, it exposes their existing home markets to competition from more efficient producers in agglomerated areas. It is, therefore, very complex to predict whether the impact of better road connectivity will be positive or negative, but international evidence (Mu and Van de Walle 2007; OECD 2009) suggests that short-distance connectivity has a more positive impact than long-distance connectivity. The question, then, is this: how can the Middle East and North Africa (MENA) connect its lagging areas to agglomeration hubs so that they benefit from spillover effects as much as possible? This chapter will deal with two kinds of connectivity: physical and virtual. It will begin with an examination of transport connectivity. But it will then go on to discuss how MENA can use information and communications technology (ICT) to bring some of the benefits of proximity to all locations, whether they be near to or distant from the economic hubs.