The deeper integration of regional markets through the elimination of non-tariff barriers can reduce trade and operating costs. In September 2018, the Geneva-based International Trade Centre (ITC) published a private sector guide to the AfCFTA. Currently, weak enforcement of existing treaties and non-tariff barriers continue to hinder free movement of goods, services and persons across borders. 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). 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. (5 marks) Q24: June 2005, Q6 Basic (a) Copy and complete the following table in your answer booklet. That often has implications for regional integration. Another advantage of regional integration is that the effect of a large market will increase global competitiveness. One South Asia The World Bank Group supports greater cooperation and regional economic integration in South Asia. 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. If you continue to navigate this website beyond this page, cookies will be placed on your browser. The importance of regional economic integration is a very pertinent issue in Africa, particularly in light of existing political and economic weaknesses. Regional value chains in minerals and metals, for example, will create demand for services and goods that feed in to that value chain. 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). This followed the launch of an African Common Passport in July 2016. Benefits Of Regional Economic Integration. Second: Extractives can help diversify economies through linkages to the broader economy. Photo credit: World Bank . Yet, in practice, intra-regional integration has not received great traction, especially in South… “regional integration” has become a major trend. The number has since risen to 49. 44 countries signed the pact in March. The recommendations indicated that political will on its own would not be sufficient. 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. 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. 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. Trades in different countries have certain restrictions as well as some tariffs, which can be issued in a very discriminatory manner for sure. 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. First, regional integration is an important building block in deterring violent conflicts between 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. 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. 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. Arguably there is no regional integration without this economic component. Regional integration is so important for resource-driven diversification in Africa. 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. Benefits of Regional Economic Integration. 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. Africa’s integration is no longer a matter of choice. There are four main types of economic integration: Free trade area is the most basic form of economic cooperation. 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. 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 … It also promises to promote trade liberalisation and improve interactions within the existing regional economic communities. This will redefine trade relations among African states. 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 … “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. Why regional integration is so important for resource-driven diversification in Africa. The importance of regional integration has been debated and settled. 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. Finally, it recommends that integration should take account of existing infrastructures, trading and production links. It can also ease the constraints faced by many firms in … 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). Role of Regional Integration Regional economic integration is fast becoming a major factor in promoting global business. " A country like India has a varied society and has a large population, so it is a more difficult task to achieve. Regional integration is a process in which neighboring states enter into an agreement in order to upgrade cooperation through common institutions and rules. The deeper integration of regional markets through the elimination of non-tariff barriers can reduce trade and operating costs. To accelerate the integration, the priority of economic integration must be balanced by those of social, cultural and political integration. 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. Regional integration refers to various types of political and economic agreements that form closer ties between sovereign countries. 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. 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. Our recent report, “Breaking out of Enclaves 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. 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. 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. (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. The AfCFTA agreement brings together the largest number of countries within a free trade area in the world. 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. Importance of regional and continental integration for Africa’s development, Macro-economics Policy, Forecasting and Research, Independent Development Evaluation (IDEV). These divisions are a constraint to economic growth, … Find out why they are important to regional integration. 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. 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. In both developed and developing countries, customs unions and free trade areas (FTAs) continue to increase and expand. 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. Give three reasons why it is important for the region to promote cooperation among member states. A dispute settlement mechanism, similar to that set up by the World Trade Organization is embedded in the agreement. Today, they account for a considerable amount of world trade (Figure15-1, 15-2). These case studies encompass three different sub-regions that vary in their level of regional integration. 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. Yet, it is clear that a lot remains to be done. To learn more about cookies, click here. 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. There is no shortage of books and papers on the benefits of regional integration between countries. Policy instruments, especially for overlapping REC member nations, need to be harmonised. 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. Regional integration is when a group of countries get together and develop a formal agreement regarding how they will conduct trade with each other. Vertical integration is a supply chain management style that many businesses decide to use. 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. The discussions focused on two key aspects of regional integration: intra-regional trade and workforce mobility. 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. Leveraging Opportunities from Regional Integration in Africa to Promote Resource-Driven Diversification” explores this nexus of extractive resources, regional integration, and economic diversification. 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. Here are 10 reasons why system integration is important to industrial end-user clients. 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. 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. This “enclave” approach to infrastructure development is not always aligned with national infrastructure development plans. 6 minute read . Implications for Managers Question: Why is regional economic integration important to international companies? 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. The content of this field is kept private and will not be shown publicly. 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. 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. 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). So, like all regional integrations the formation of CARICOM comes with its advantages and disadvantages. Regional Integration in Africa Trudi Hartzenberg Trade Law Centre for Southern Africa (tralac) ... important. There is also a need for a secure environment and the harmonisation of business legislation and regulations. 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. This site uses cookies to optimize functionality and give you the best possible experience. In Africa, especially, mining and other companies that handle natural resources traditionally provide their own power, railways, roads, and services to run their operations. 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