An Introduction to Economic Corridors
In an era of growing interconnectedness amongst regional and global blocs, economic corridors are gaining momentum as one of the main drivers of such connectivity initiatives. Economic corridors are not a new phenomenon; the Silk Road is one of the most famous pre-modern interregional trade networks. However, modern globalization processes have altered global economic strategies, which have increased the visibility of such projects, especially in the non-Western world. Economic corridors link economic hubs, which tend to be clusters of key economic players and resources (i.e. leading industries, educational institutions, governing bodies) concentrated in major urban centers. Economic corridors are playing an increasingly vital role in facilitating processes of regional and global integration.
One of the major drivers for the development of economic corridors is BRICS, a term for the coalition of five significant developing economies: Brazil, Russia, India, China, and South Africa. The BRICS countries are renowned for their substantial impact on regional and global issues, specifically in the realm of economics. They are a diversified group spread over multiple continents and possess significant populations, extensive land area, and abundant natural resources.
An important element of collaboration within the BRICS framework is the establishment of economic corridors, which have gained speed since the beginning of the 21st century due to their focus on infrastructure development and connectivity. The economic corridors are a manifestation of the BRICS countries’ endeavors to bolster economic connections, foster growth, and advance regional integration. Nevertheless, the achievements and consequences of these endeavors may be influenced by obstacles such as funding, geopolitical conflicts, ecological considerations, and delays in project execution. BRICS has actively promoted the development of significant economic corridors, as these initiatives are in line with its overarching goal of reducing Western hegemony and establishing a multipolar global order. Three critical economic corridors– the Belt and Road Initiative (BRI), the International North-South Transport Corridor (INSTC), and the India-Middle East-Europe Economic Corridor (IMEEC), will be discussed below.
The first project is the Belt and Road Initiative (BRI), a Chinese-led massive infrastructure initiative. Since its inception in 2013, China has spent an estimated $1 trillion dollars on projects in Asia, Europe, and Africa, and may invest up to $8 trillion in total. The BRI not only contains an economic dimension in terms of promoting cross-continental trade and investment, but also possesses a values-based component of constructing a Sino-centric interregional order that adheres to Beijing’s preferences. International trade serves as a forum for China to create spheres of influence, with Sri Lanka, Myanmar, Pakistan, and Djibouti serving as particularly notable examples of growing Chinese authority. The BRI has enormous potential to overturn current global norms and create a new order in its place, which could establish new opportunities for certain actors while encumbering the autonomy of others.
The second project is the International North-South Transport Corridor (INSTC), which Russia, India, and Iran spearheaded in 2001. From India and Iran’s perspective, the project serves as a gateway to markets in Central Asia, the Caucasus, Russia, and potentially Europe. The INSTC could also help Iran bypass Western sanctions that have long crippled its economic development. Although the project has a much smaller budget compared to the BRI and endured years of painfully slow progress, momentum has picked up in the wake of the 2022 Russo-Ukrainian War. Due to Western sanctions over Ukraine, Russia has placed greater urgency in cementing stronger Eurasian trade relations, and thus the INSTC is becoming an increasingly vital conduit to do so. For example, Russia stated interest in investing millions of dollars for railway infrastructure projects in countries like China, Kazakhstan, and Mongolia, as well as additional projects based in Iran and Azerbaijan. The INSTC is not a mega project like the BRI; instead, it involves multiple stakeholders who are trying to align their North-South connectivity as per their national and geopolitical priorities. Multilateral lending institutions like the Asian Development Bank, Eurasian Development Bank and Islamic Development Bank have funded projects associated with the INSTC.Thus, the INSTC is gearing up to potentially challenge the BRI as well as Western-driven trade initiatives.
The third project is the India-Middle East-Europe Economic Corridor (IMEEC). On 10 September 2023, the Memorandum of Understanding (MoU) was signed by the governments of India, United States, United Arab Emirates, Saudi Arabia, France, Germany, Italy, and European Union during the 2023 G20 New Delhi Summit. The establishment of economic links along the southern border of Eurasia through this growing and diverse corridor has the capacity to change Middle Eastern, European, and Indian Ocean region-based trade routes. The objective of the project is to construct a railway system that would traverse Saudi Arabia and Jordan to link the UAE with Israel. From there, the railway would continue via a maritime route to reach Mediterranean EU ports, particularly the Greek port of Piraeus, and connect with continental Europe. IMEEC could dramatically reduce transit times and costs, lessen dependence on the vulnerable Bab el-Mandeb Strait and Suez Canal, and has the capacity to serve as an Indian-initiated alternative to the BRI– which helps explain the US and EU’s support for the initiative.
Economics Corridors and Changing Ideologies
The rise of economic corridors has challenged the legitimacy of leading post-WWII multilateral organizations, such as the United Nations, the World Bank, the IMF, and NATO. One of the fundamental differences between these two systems is the level of formality. The current liberal-democratic order of international organizations are formal alliances, bounded by common rules and sets of shared values. Economic corridors, by contrast, are informal partnerships: member-states can use these forums to discuss shared interests, but can go back to prioritizing their national interests in the absence of common objectives.
India exemplifies the growing tendency towards informal paradigms particularly well. While India and China participate in multilateral forums like BRICS,they compete with each other through rival economic corridors like BRI (China) and the INSTC and IMEEC (India). In a similar vein, China and Russia are now in rising tensions with the West, but India balances its alliances by interacting with both BRICS and Western-dominated organizations like the G7, G20, and the Quad. While such measures greatly aid a country’s pursuit of its national interests, it blurs the distinction as to which other countries constitute its “friends” or “foes” and could complicate a country’s long-term foreign policy objectives.
The world is currently undergoing a shift from formal multilateral organizations to economic corridors and, by extension, informal intergovernmental organizations and different forms of cooperation between more limited numbers of countries. These changes have raised questions about how this phenomenon could revolutionize the global geopolitical environment. Economies that have fostered cooperation via economic corridors are changing modes of cross-border governance. The agreements underpinning this form of global governance are voluntary and are not linked to other forms of formal collaboration such as regional organizations.
The most prominent clash of the “old and the new”- in terms of formal multinational institutions versus informal economic corridors- is represented by the US and China. Given that the US is losing its global preeminence, many nations are figuring out whether to depend on the US or China. China is using forums like BRICS and BRI to attract partners. Unlike the US and other Western countries, a Chinese-led world order places less emphasis on shared values, philosophies and rules. Instead, it prioritizes mutually beneficial trade and power relationships. In a nutshell, China wants to succeed the US as the dominant hegemonic power, but economics, rather than ideology, will drive geopolitics and the new multipolar system.
As for the US, ever since the success of the G7 meetings in 2021, it has been trying to provide feasible alternatives to China’s BRI through both ideological and financial measures. The US’s current interest in the IMEEC is a derivative of those efforts, though the project’s long-term success will be determined by how effectively it can gather financing from its partnering countries. In 2021, the Biden Administration announced the Build Back Better World, or the B3W Initiative, at the G7 Summit in the UK. The B3W was described as “a values-driven, high-standard, and transparent infrastructure partnership led by major democracies to help narrow the $40+ trillion infrastructure need in the developing world.” However, by the end of the year, analysts began to write off the B3W as an ill-conceived strategy to counter the BRI. The B3W seemed to suffer from the same doing and undoing: it sought to counter the overpromises and underperformances of the BRI by planning to mobilize $40 trillion for developing economies by 2035. However, the B3W ironically over-promised and underperformed itself, as its ambitions were undermined by the need for more credible financial planning, especially with regard to de-risking capital. In 2022, the Biden Administration made another attempt to provide a viable alternative to China’s mammoth vision during the G7 Summit in Germany. This time, the US and other G7 members introduced the Partnership for Global Infrastructure and Investment, or the PGII. The PGII improved IMEEC to make it a more suitable program for closing the infrastructure gap in developing countries, strengthening global economies and supply chains, and advancing US national security.
Other major global actors, especially in the Middle East, are utilizing economic corridors and informal strategies to maximize benefits in a transforming global order. Saudi Arabia, the UAE, and Iran all joined BRICS in 2024. Moreover, Saudi Arabia and the UAE have endorsed the BRI and are founding members of IMEEC, though they are largely uninvolved with the INSTC. Iran co-founded the INSTC, though it is not part of IMEEC and has been relatively marginalized by the BRI due to sanctions complications.
BRICS-affiliated economic corridor countries represent an increasing portion of the total share of global GDP, while the G7 comprise a decreasing portion. Saudi Arabia and the UAE are adjusting to this multipolar world by participating in economic corridor projects. They want to have increasingly non-aligned foreign policies to not burn bridges with the West, but want to reap the benefits of technological innovation in Asia and expand their markets in the region and the greater Global South.
Iran, meanwhile, has maintained a hostile relationship with the US and the West for decades. Tehran has long challenged US hegemony and has increased its cooperation with China and Russia to restructure the global order and lessen US domination. Iran’s entry into BRICS counters US sanctions and Western pressure. Its membership will also strengthen the INSTC economic corridor, which India has already promised to invest 500 million dollars in. One commonality that both Saudi Arabia/ the UAE and Iran share, though, is that they are taking advantage of growing multipolarity through BRICS-led economic corridor channels.
Conclusion
As the world becomes globalized and opportunities grow universally approachable, it is natural that other centers of production and consumption will rise up and redistribute power. While cracks have begun appearing in the current liberal democratic world order, the multipolar world order-its most likely successor-has not been fully formed yet. This fact is particularly evident with regard to the informal nature of BRICS-associated economic corridors like BRI, INSTC, and IMEEC. How do they compare to other global governance institutions? Do they constitute a new form of global governance? What will their roles be as the world edges towards a multipolar framework? These questions must be kept in mind as the BRI, INSTC, and IMEEC continue to gain traction as crucial conduits of regional and global trade and interaction. One fact is certain though: BRICS and its affiliated countries and partners are beginning to upend the West’s long-standing liberal democratic order, and the world must prepare for increasingly influential multipolar norms.