The IMEC as a Catalyst for Global Prosperity

By Bibek Debroy & Aditya Sinha

Economic corridors have the potential to bring about various benefits,
including increased trade, foreign investment, and improved living
conditions for citizens in the participating countries. Additionally, they
can contribute to the development of rural areas, address regional
imbalances, and enhance the overall socio-economic progress of the
regions they traverse. The establishment of such corridors can also lead
to the creation of new routes for the flow of goods, thereby increasing
economic and geopolitical interdependence between regions.

The India-Middle East-Europe Economic Corridor (IMEC) is poised to
revolutionize economic interactions among India, the Middle East, and
Europe. Primarily, it aims to establish a multi-modal transport network
integrating sea and rail routes, along with innovative infrastructural
elements like hydrogen pipelines and high-tech IT connections.

A significant aspect of IMEC is its potential to dramatically enhance trade
opportunities. By offering a more efficient transit route compared to the
Suez Canal, IMEC is projected to reduce transit times for goods by
about 40%. This would not only expedite trade between India, the Middle
East, and Europe but also render it more cost-effective, fostering an
environment conducive to economic growth and trade expansion​​​​​​.

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

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

The corridor's influence extends beyond mere trade facilitation. It is
expected to be a catalyst for industrial growth and employment in the

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

IMEC also holds strategic importance in terms of energy security and
environmental sustainability. The Middle East's rich energy resources
will be more accessible, thereby enhancing the energy security of the
involved nations. Concurrently, the focus on clean energy transportation,
like hydrogen pipelines, aligns with global efforts to reduce greenhouse
gas emissions. The strategic development of ports and other
infrastructures under IMEC is expected to attract foreign investment and
strengthen political and diplomatic relations among the participating
countries. Additionally, by offering an alternative to China's Belt and
Road Initiative (BRI), IMEC holds potential to reshape global trade
dynamics and reduce dependency on traditional maritime routes.

Moreover, the cultural integration aspect of IMEC, fostering connections
among diverse cultures and civilizations, coupled with its potential to
enhance regional connectivity and peace, positions it as a transformative
initiative with far-reaching implications.

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

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

However, the success of IMEC is closely tied to the geopolitical stability
of the Middle East. This region, despite its rich cultural heritage and
strategic importance, has long been afflicted by political unrest and

conflict. Establishing peace in the Middle East is not merely a regional
concern but a global necessity. A stable Middle East is crucial for
ensuring secure trade routes, reliable energy resources, and the
unhindered exchange of knowledge and people. It would create an
environment conducive to the economic and technological collaborations
envisioned by IMEC. Furthermore, peace in this region would have far-
reaching effects, contributing to global economic stability and opening
avenues for collaborative solutions to global issues like climate change,
poverty, and health crises.

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