Building a Connected Asia: Infrastructure and Regional Cooperation Open New Pathways to Jobs

Regional integration can create jobs across Asia-Pacific, with infrastructure connectivity and targeted institutional cooperation delivering the strongest benefits. However, reducing inequality requires better-designed integration that supports poorer regions, SMEs, workforce skills and inclusive cross-border opportunities.

Regional cooperation is becoming increasingly important for Asia and the Pacific as economies confront supply-chain disruptions, technological change and uneven development. Research from the Asian Development Bank (ADB) and Auckland University of Technology, covering 173 economies between 2006 and 2023, finds that deeper regional cooperation and integration can support employment, but simply opening markets does not guarantee that the gains will be equally shared. The strongest results come from infrastructure connectivity and targeted institutional cooperation, suggesting that governments need to look beyond traditional trade agreements.

The study examines four major dimensions of regional cooperation and integration (RCI): trade and investment, infrastructure and connectivity, institutional arrangements, and people and social mobility. Its findings have direct implications for governments, development institutions and businesses seeking to turn regional integration into jobs, investment and more inclusive growth.

Infrastructure Can Turn Regional Integration Into Jobs

Infrastructure emerges as the clearest driver of employment. After researchers adjusted their model for potential endogeneity, the estimated coefficient for intraregional infrastructure integration increased from 0.057 to 0.136 and remained statistically significant.

This economic logic matters for policymakers. Better roads, ports, aviation links, electricity networks and digital infrastructure reduce the cost of moving goods, services and workers. They also allow businesses to reach larger markets and participate in regional and global value chains.

Cross-border power networks can extend reliable electricity to underserved areas, while broadband and digital connectivity can expand e-commerce, digital logistics and technology-enabled services. Transport corridors can strengthen manufacturing, tourism, agriculture and logistics simultaneously.

For international development partners, this suggests that infrastructure financing can have greater development impact when physical projects are combined with trade facilitation, skills development, affordable digital access and support for micro, small and medium-sized enterprises.

The private sector could benefit from growing opportunities in logistics, energy, telecommunications, digital services, construction and regional manufacturing. But infrastructure must connect poorer and remote regions rather than concentrating investment exclusively around established economic centers.

Asia's Integration Divide Could Shape Who Benefits

Regional integration remains highly uneven. In 2023, Southeast Asia performed above the Asia-Pacific average in seven of eight dimensions of intraregional integration, while East Asia was above average in six.

South Asia was considerably less integrated, exceeding the regional average in only people and social integration within the region. On the inter-subregional measure, South Asia remained below average across all dimensions examined.

This gap matters because economies with better infrastructure, institutions and skilled workers are better positioned to capture investment and production opportunities. Poorer countries and regions risk being left behind if integration progresses faster than their capacity to participate.

Governments therefore need complementary domestic policies. Improving border management, customs systems, workforce skills, regulatory quality, electricity supply and digital connectivity can help local businesses take advantage of regional markets.

Development partners can play an important role by directing financing and technical assistance toward weaker economies, border areas and infrastructure gaps instead of allowing regional investment to remain concentrated in already competitive hubs.

Trade Growth Alone Will Not Guarantee Employment

One of the study's most important findings is that trade and investment integration alone does not show a statistically significant positive employment effect. The estimated relationship with job creation is negative both within and across regions, but the effects are weak and statistically insignificant.

This does not mean trade integration necessarily destroys jobs. Expanded markets, foreign investment and regional value chains can create employment, but these benefits may be offset by import competition, automation, technological upgrading and the movement of production between industries.

The finding carries a warning for policymakers: reducing tariffs or signing agreements cannot substitute for investments in infrastructure, education and institutions.

Businesses face a similar balance of opportunity and risk. Regional integration can provide larger markets and cheaper inputs, but it also increases competition. Smaller firms may struggle with certification requirements, regulatory standards and technology costs.

Governments and development institutions should therefore combine trade reforms with SME financing, technical assistance, vocational training and workforce reskilling. Helping domestic firms improve productivity could determine whether integration generates new businesses and employment or simply increases competitive pressure.

A Subregional Approach Could Make Growth More Inclusive

The biggest challenge is inequality. The study finds that most dimensions of regional integration do not produce statistically significant reductions in income inequality. Infrastructure may generate jobs while initially concentrating economic benefits around cities, industrial corridors and workers with stronger skills.

Institutional cooperation at the inter-subregional level stands out as the major exception, showing a strong and statistically significant inequality-reducing effect while also supporting job creation.

This finding strengthens the case for a bottom-up, subregional-first model. Cooperation among neighboring economies can focus on practical development constraints such as customs procedures, border infrastructure, transport corridors, electricity connections and labor mobility.

Migration also requires attention. Cross-border workers can fill labor shortages, acquire skills and generate remittances, but opportunities are not equally accessible. The report notes that ASEAN's mutual recognition arrangements cover only eight professional occupations, highlighting scope to expand recognition to technical, vocational and other occupations while strengthening worker safeguards.

The policy lesson is therefore not simply to pursue more regional integration, but to pursue better-designed integration. Governments should expand transport, energy and digital networks, improve skills recognition, reduce migration barriers, harmonize regulations and direct investment toward poorer and labor-abundant economies.

For development partners, the priority should be helping weaker economies build the infrastructure and institutions needed to participate. For businesses, deeper integration offers new markets and supply-chain opportunities but also greater competition and regulatory demands.

Ultimately, Asia-Pacific integration will be judged not only by how much trade and investment it generates, but by whether those connections create productive jobs and spread economic opportunities beyond established growth centers.