| The China Pakistan Economic Corridor(CPEC)is an extension of the concept of regional economic cooperation and the "One Belt And One Road" initiative,aims to promote economic development and regional connectivity between China and Pakistan.The economic corridor will connect Pakistan's Gwadar port with Kashgar in western China.This will not only benefit Pakistan and China,but also have a positive spill over effect on neighbouring countries by strengthening the geographical connectivity between Pakistan and landlocked central Asian countries.Under this framework,the government is investing heavily in improving Pakistan's rail network by upgrading existing lines and expanding the rail network.Among the major projects under CPEC,Karachi-Peshawar railway line(ML-1)is considered as lifeline of Pakistan Railways and upgradation will enhance speed,reduce travel time,enhance the number of trains per day and hence generate more revenue while decreasing the burden on roads.This project includes the upgradation and doubling of the main line from Karachi to Peshawar and Taxila to Havelian that is about 1872 kilometres.The upgradation of ML-1 will reduce the cost of transportation for passengers and freight,establish people-to-people contacts in overall Pakistan to improve the tourism and create more employment opportunities.At the same time,better regional connectivity will create greater trade opportunities by giving access to a new market for its trading goods and improve trade and economic development.This study will examine the industry life cycle and efficiency evaluation of Pakistan railway industry,study the role of railway transportation in economic development of Pakistan,assess the transport cost,and travel time for trade under China Pakistan Economic Corridor.The relevant indexes of Pakistan railway industry are collected,principal component analysis(PCA)is applied to reduce the indexes a new utility index is constructed for Pakistan Railways based on these indexes.According to utility index,life cycle of railway industry is divided into different rounds of development and four stages of introduction,growth maturity and decline.Based on trend analysis,the current and future development of Pakistan railway industry is investigated and examine how railway industry in Pakistan enter the new round of industry life cycle through external economic stimulation and trade.Data envelopment analysis was used to evaluate the efficiency of railway industry with internal factors,and Tobit regression method was used to investigate the influence of external factors on railway efficiency.Firstly,based on industry life cycle theory,this paper uses factor analysis to divide the railway industry into different rounds of development and four stages of introduction,growth,maturity and decline.Furthermore,it will examine how industrial innovations and upgradations bring a new round of development to Pakistan railway industry.This study uses principal component analysis and industry life cycle theory to examine the development trends of Pakistan Railways.The results indicate that,railway industry in Pakistan has completed the first round of development from 1950 to 1999,second round from 1999-2011 and enter the third round of industry life cycle after 2011.In the first round,the output of railway industry increase from 1950 to 1975 and decrease from 1975 to 1999 while the second round of railway industry life cycle is for small period of time from 1999 to 2011.After 2011,Pakistan railway industry enter the third round and output starts to increase.The main reasons behind the decline were underinvestment,political interference,and the rise of the same-sector competitor,the National Logistics Cell(NLC).The China Pakistan economic corridor will construct and upgrade the railway infrastructure and help to revive the railway industry in Pakistan.Secondly,this paper aims to examine the efficiency of Pakistan Railways by using internal and external factors.It evaluates the technical,pure technical and scale efficiencies of Pakistan railways from 1950 to 2016 and rank the efficient decisionmaking units(DMUs).It also includes the external factors affecting the railway efficiency in Pakistan.Data envelopment analysis(DEA)is use to evaluate the efficiency while super efficiency model is employ to rank the efficient DMUs.Tobit regression model is used to examine the impact of external factors on performance of Pakistan railways.The empirical result indicates that there are five DMUs with overall technical efficiency value of 1.The Pakistan railways operate at 86.8 percent level of overall technical efficiency i.e.,inputs could be decreased by 13.2 percent without sacrificing output to make the DMU efficient.Furthermore,the contribution of scale inefficiency in overall technical inefficiency has been observed to be smaller due to pure technical inefficiency(managerial inefficiency).The results of Tobit regression model suggest that economic development and trade have positive effects on technical efficiency while the growth of highways affects it negatively as external factors.Thirdly,this study looks into railway transportation to find its long-run relationship and direction of causality with economic development.It first finds the order of integration of the variables and their causal relationship using cointegration and Granger causality test approach for Pakistan between 1971 and 2017.It use Auto Regressive Distributed Lag Model and Vector Error Correction model to find short-run and long-run causality.The results indicate that there is a long-run and causal relationship between railway transportation and economic development.Rail transport infrastructure has longrun positive impact on economic development.Furthermore,Granger causality test shows a unidirectional causality in long-run running from railway transportaton to economic development.The new results from this research provides a comprehensive picture of determinants of economic development from railway transportation in Pakistan and these new findings not only help policy makers but also can help to advance the current literature.Therefore,it is suggest that the government of Pakistan should concentrate more to increase the rail transport infrastructure for higher economic development.Fourthly,this study compares the existing route and new CPEC route to examine the effect of China-Pakistan Economic Corridor on trade.The results show that transport cost for 40-foot container between Kashgar and destination ports in the Middle East is decrease by about 1450 dollars and for destination ports in Europe is decrease by 1350 dollars.The travel time is decrease by 21 to 24 days for destination ports in the Middle East and 21 days for destination ports in Europe.The distance from Kashgar to destination ports in the Middle East and Europe is decrease by 11,000 to 13,000 km.The present research is first of kind to suggest a roadmap for bringing the improvements in Pakistan Railways.The government should plan major installation and upgradation of railway tracks under China-Pakistan Economic Corridor(CPEC).The upgradation of Karachi-Lahore Peshawar(ML-1)railway track will help increasing the freight transport by 20% and passenger traffic by 45%.Besides upgrading the track,the railways should invest in the rolling stock,locomotives,passenger vehicles and freight wagons.In order to connect the developed and under developed areas in Pakistan,a suitable rail transport model is required to enhance the economic development.Hence,in order not to negatively affect the economic development,steps must be taken to boost the government spending on railway transportation to overwhelm the limitations facing by the railway transportation for expansion.In short,the Government of Pakistan must expand and upgrade the nation's railway transportation with topmost priority actions.The authorities should take new initiatives and implement the propose projects under CPEC to improve the performance of railway industry.Pakistan and China should take necessary actions for the construction of railway link between both countries to enhance trade and economic prosperity. |
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