why is regional integration important

Vertical integration is a supply chain management style that many businesses decide to use. Learn how the World Bank Group is helping countries with COVID-19 (coronavirus). Currently, weak enforcement of existing treaties and non-tariff barriers continue to hinder free movement of goods, services and persons across borders. Against an international backdrop of changing political and economic priorities, Africa must plot a new course for its industrialisation and economic development, using the momentum of regional integration. The deeper integration of regional markets through the elimination of non-tariff barriers can reduce trade and operating costs. Why regional integration is so important for resource-driven diversification in Africa. Yet, in practice, intra-regional integration has not received great traction, especially in South… The content of this field is kept private and will not be shown publicly. First, regional integration is an important building block in deterring violent conflicts between nations. Regional integration in Africa, however, can play a vital role in diversifying economies away from dependence on the export of just a few mineral products; in delivering food and energy security; in generating jobs for the increasing number of young people; and in alleviating poverty and delivering shared prosperity. To date, the RECs have made slow but steady progress on Africa’s integration, particularly in infrastructure (SADC, EAC), trade liberalisation and facilitation (West Africa economic and monetary Union, COMESA), free movement of people (ECOWAS), and peace and security (ECOWAS and SADC). This trend was triggered by the EU market integration. The discrimination is something which depends on community and country discrimination as well. There is no shortage of books and papers on the benefits of regional integration between countries. This followed the launch of an African Common Passport in July 2016. That is why, when one talks of regional economic cooperation and integration, it is natural to look to ASEAN as the hub around which increased integration can take place. Ensuring that regional economic integration succeeds in Africa is very important, not only because of the prospective benefits mentioned above, but also because the policies that are required to ensure its success are the same as those needed if Africa is to benefit from the In view of this, it is appropriate to briefly reexamine why regional integration is pursued, what is understood by regional integration and pre-conditions and principles for regional integration in sub-Saharan Africa. Promotion of regional integration remains an important economic and political goal in Africa. To learn more about cookies, click here. These case studies encompass three different sub-regions that vary in their level of regional integration. Convened on the theme, “Regional and Continental Integration for Africa’s Development”, the three-day event will explore proposals for enhancing the broad and inclusive integration of African economies. Regional Cooperation and Integration (RCI) RCI promotes growth and narrows development gaps between ADB’s developing member countries by building high quality cross-border infrastructure, closer trade integration, intraregional supply chains, and stronger financial links, and motivating provision of regional public goods, enabling slow-moving economies to speed their own expansion. To accelerate the integration, the priority of economic integration must be balanced by those of social, cultural and political integration. Through our research and the recommendations provided in the report, we show that regional integration is still relevant for Africa’s resource-rich countries – and that it is more crucial than ever before for diversifying countries’ economies as the global commodity supercycle comes to an end. Today, they account for a considerable amount of world trade (Figure15-1, 15-2). April 1, 2011, Harri Daniel, 1 Comment. Benefits of Regional Economic Integration. Importance of regional and continental integration for Africa’s development, Macro-economics Policy, Forecasting and Research, Independent Development Evaluation (IDEV). Regional Integration is a process in which neighboring countries enter into an agreement in order to upgrade cooperation through common institutions and rules. Here are 10 reasons why system integration is important to industrial end-user clients. So, like all regional integrations the formation of CARICOM comes with its advantages and disadvantages. The recommendations indicated that political will on its own would not be sufficient. If you continue to navigate this website beyond this page, cookies will be placed on your browser. Regional integration is essential here as well, since goods, services and people need to be able to flow seamlessly across borders to reduce costs and to help firms become competitive enough to link to these value chains. Regional economic integration refers to agreements between countries in a geographic region to reduce, and eventually remove, tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other" (Hill, 2004). Share on. It highlights the importance of structural funds financed by customs and taxation revenues to assist weaker partners in the integration scheme to ensure an equitable distribution of the gains of regional integration. Find out why they are important to regional integration. By using independent system … In fact, we have been fighting for the idea of integration for the most part of the last five decades and have, arguably, made some successes towards its attainment. Conflict is replaced by constructive dialogue. It can also ease the constraints faced by many firms in … The importance of regional economic integration is a very pertinent issue in Africa, particularly in light of existing political and economic weaknesses. The importance of regional integration has been debated and settled. Implications for Managers Question: Why is regional economic integration important to international companies? The deeper integration of regional markets through the elimination of non-tariff barriers can reduce trade and operating costs. Our recent report, “Breaking out of Enclaves It proposes to create a single market for goods and services, with free movement of people and investments across 55 countries. Regional value chains in minerals and metals, for example, will create demand for services and goods that feed in to that value chain. Recent research by the African Development Bank shows that intra-African trade is the lowest of all global regions at approximately 15%, compared to 54% in the North American Free Trade Area, 70% within the European Union and 60% in Asia. For Africa, a vast continent of over 1.2 billion people, integration has considerable potential not only for promoting robust and equitable economic growth through markets, but also for reducing conflict and … The AfCFTA agreement brings together the largest number of countries within a free trade area in the world. Regional integration is so important for resource-driven diversification in Africa. Regional integration helps countries overcome divisions that impede the flow of goods, services, capital, people and ideas. Arguably there is no regional integration without this economic component. There is also a need for a secure environment and the harmonisation of business legislation and regulations. A country like India has a varied society and has a large population, so it is a more difficult task to achieve. The build-up to the conference began in March 2018, when 44 African countries committed to the launch of a common market for Africa - the African Continental Free Trade Area (AfCFTA). Some of the advantages are, * Foreign Direct Investments (FDI) stimulates economic growth through the sharing of technology, marketing channels, managerial know-how and to the member nations * Opening up and allowing duty free trade also stimulates the economy and creates dynamic … Natural resources management, particularly in the extractives industry, can make a meaningful contribution to a country’s economic growth when it leads to linkages to the broader economy. The objectives of the agreement could range from economic to political to environmental, although it has typically taken the form of a political economy initiative where commercial interests are the focus for achieving broader socio-political and … Give three reasons why it is important for the region to promote cooperation among member states. Africa is infested with the deepest levels of poverty, lowest share of world trade, and weakest development of human capital and infrastructure, to say the least. It is important as well, before beginning my articles, that one understands basic details of NAFTA. This site uses cookies to optimize functionality and give you the best possible experience. First: Since resource deposits don’t always fit neatly inside the borders of individual countries and tend to span multiple borders (including landlocked countries), trans-boundary mining transport will need to be built to extract and transport the resources. This “enclave” approach to infrastructure development is not always aligned with national infrastructure development plans. Importance of National Integration: The importance of national integration is certainly can be understood as it helps to stabilize democracy, improve economic growth, develop the nation and provide all the important rights and duties to the people. 44 countries signed the pact in March. “regional integration” has become a major trend. A deeper integration agenda that includes services, investment, competition policy and other behind-the-border issues can address the national-level supply-side constraints far more effectively than an agenda which focuses almost exclusively on border measures. Yet, it is clear that a lot remains to be done. Benefits Of Regional Economic Integration. The African Continental Free Trade Agreement seeks to bring Africa into the global trade environment as one continent rather than as individual countries. “Potential advantages to the private sector include increasing economies of scale and access to cheaper raw materials and intermediate inputs; better conditions for regional value chains and integration into global value chains,” the ITC says. This will redefine trade relations among African states. Development economists, policymakers, African and non-African researchers are meeting in Kigali, Rwanda this week to discuss the shape and future of continental integration at the 13th African Economic Conference (AEC). Another advantage of regional integration is that the effect of a large market will increase global competitiveness. To maximize the economic benefits of extractives, the sector needs to broaden its use of non-mining goods and services and policymakers need to ensure that the sectors infrastructure needs are closely aligned with those of the country’s development plans. The most important aspect of regional integration is the ability to help strengthen economic as well as social and cultural ties between countries, and the biggest advantage is the ability to establish and maintain free open trade. It can also ease the constraints faced by many firms in gaining access not only to demand for their products but also to the essential services and skills that they need as to boost productivity and diversify into higher-value-added areas. In both developed and developing countries, customs unions and free trade areas (FTAs) continue to increase and expand. To build on these accomplishments, this year’s African Economic Conference (AEC) in Kigali must define what the African Continental Free Trade Agreement means for Africa, and how it will foster integration. Saving the end-user client personnel costs. Trades in different countries have certain restrictions as well as some tariffs, which can be issued in a very discriminatory manner for sure. In Africa, especially, mining and other companies that handle natural resources traditionally provide their own power, railways, roads, and services to run their operations. Because stronger regional economies will have the confidence and capacity to compete effectively in volatile and competitive global markets, the development of solid links between countries in a region-and larger and more affluent markets outside the region-can help raise standards and create incentives for deeper regional integration. Regional Integration in Africa Trudi Hartzenberg Trade Law Centre for Southern Africa (tralac) ... important. Regional economic integration refers to efforts to promote free and fair trade on a regional basis. For Africa, a vast continent of over 1.2 billion people, integration has considerable potential not only for promoting robust and equitable economic growth through markets, but also for reducing conflict and enhancing trade liberalisation. Deepening regional integration among African economies, therefore, provides both opportunities and challenges to the sound management of extractive resources and translating wealth from these resources in to diversified economies and equitable growth. Policy instruments, especially for overlapping REC member nations, need to be harmonised. Against an international backdrop of changing political and economic priorities, Africa must plot a new course for its industrialisation and economic development, using the momentum of regional integration. Regional integration refers to various types of political and economic agreements that form closer ties between sovereign countries. Non-mining businesses like farms or food traders in sparsely populated or remote areas, for example, would benefit from shared infrastructure, since railways, roads and electricity are all needed to bring goods to markets. In September 2018, the Geneva-based International Trade Centre (ITC) published a private sector guide to the AfCFTA. The policy of economic integration is purely commercial, and it takes place in order to make sure that certain trade barriers are reduced in the best way so that some nations can be unified together. (5 marks) Q24: June 2005, Q6 Basic (a) Copy and complete the following table in your answer booklet. Database: Content of Deep Trade Agreements This dataset on the content of preferential trade agreements (PTAs) maps 52 provisions in 279 PTAs notified at WTO signed between 1958 and 2015. 6 minute read . Beyond lifting people out of poverty and invigorating Africa’s growth trajectory, the ITC observes that the African private sector will be the key beneficiary. Regional integration is when a group of countries get together and develop a formal agreement regarding how they will conduct trade with each other. Regional integration increase a nation economic activities overall, which in turn raises GDP and can provide better living standards for all citizens within the regional block. (6 marks) Suggest two ways in which the government of your country may demonstrate the spirit of cooperation in the event of an environmental disaster in the region. Breaking out of Enclaves: Leveraging Opportunities from Regional Integration in Africa to Promote Resource-Driven Diversification | December 2015. One South Asia The World Bank Group supports greater cooperation and regional economic integration in South Asia. Africa’s integration is no longer a matter of choice. Another key concern is that integration must be people-centred, with stronger citizens’ partnerships, especially among Africa’s burgeoning youth population, private sector players and civil society institutions, in order to ensure sustainable development. Regional economic integration refers to the agreement amongst countries within a certain geographic area for reducing and ultimately removing tariff barriers, making sure there is better flow of services or goods through the respective nations. At this sub-regional level Africa’s integration is the most important response to globalisation, although progress is painfully slow and the problem of countries belonging to different regional organisations needs to be resolved. These divisions are a constraint to economic growth, … That often has implications for regional integration. This was the genesis of Africa’s regional economic communities (RECs), regarded as the building blocks of the African Economic Community. There are four main types of economic integration: Free trade area is the most basic form of economic cooperation. The analysis is based on three case studies of efforts to create trans-boundary transport corridors anchored by extractive resources: The cases include the extraction of coal in the Nacala corridor in southern Africa; proposals for the exploitation of iron ore in Guinea and Liberia; and the LAPSSET corridor in East Africa that aims to ship oil and gas from South Sudan to ports on the Indian Ocean. Second: Extractives can help diversify economies through linkages to the broader economy. Answer:• Regional economic integration means that markets that had been protected from foreign competition are increasingly open – these developments are particularly significant in the European Union and NAFTA• However, regional economic integration is likely to … They are assessed through a framework that organizes the most important policy questions and leads to a number of concrete recommendations for national and regional policymakers. In a continent facing massive infrastructure needs, African countries can thus miss out on opportunities to promote the shared use of infrastructure and to strengthen the linkages between extractive resources and the broader economy. It also promises to promote trade liberalisation and improve interactions within the existing regional economic communities. The Organization of African Unity and its successor, the African Union, have championed continental cooperation since the 1960s, culminating in the signing of the Abuja Treaty in 1991. The discussions focused on two key aspects of regional integration: intra-regional trade and workforce mobility. Regional integration is essential here as well, since goods, services and people need to be able to flow seamlessly across borders to reduce costs and to help firms become competitive enough to link to these value chains. The number has since risen to 49. Global experience shows that the development of such infrastructure requires strong cooperation and coordination among all parties involved, along with a legal and regulatory environment that allows for the shared use along that infrastructure. Designing and building such infrastructure and a regulatory environment in a multi-country context is, however, very complex: It involves a wide range of political-economy issues that need to be addressed. Leveraging Opportunities from Regional Integration in Africa to Promote Resource-Driven Diversification” explores this nexus of extractive resources, regional integration, and economic diversification. Regional integration is a process in which neighboring states enter into an agreement in order to upgrade cooperation through common institutions and rules. The preponderance of bilateral and multilateral agreements between African states and the international community should also be reviewed to ensure that existing and future trade and investment arrangements align with regional and continental integration. Role of Regional Integration Regional economic integration is fast becoming a major factor in promoting global business. " Photo credit: World Bank . The relationship between resources, regional integration and diversification is twofold. Finally, it recommends that integration should take account of existing infrastructures, trading and production links. Secondly, regional integration implies the lowering of barriers to trade, thus benefiting the economy and increasing the well-being of the member states’ citizens. Regional integration is often seen as less relevant for resource-rich countries, since demand for commodities typically comes from the global market rather than from regional demand. The report looks at how regional approaches can increase the local employment and production effects of extractive-resources projects and discusses some of the regulatory, institutional, and political economy barriers facing African policymakers in achieving regional cooperation. A dispute settlement mechanism, similar to that set up by the World Trade Organization is embedded in the agreement. Natural resources management, particularly in the extractives industry, can make a meaningful contribution to a country’s economic growth when it leads to linkages to the broader economy. 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