PROMOTING REGIONAL ECONOMIC INTEGRATION

Challenges

Regional Economic Integration (REI) has the potential to boost the economic welfare of countries and a region as a whole. It creates larger markets and new trading opportunities while increased competition lowers prices for consumers. Aside from economic impacts, REI also has a political dimension. It tends to have a positive effect on security and stability in a region, on the bargaining power of participating states in international negotiations, and on financial cooperation in regional projects.
However, not all countries benefit equally from regional integration. Less developed states tend to face high adaptation costs when REI is targeted in developing regions. Compensatory policies and mechanisms are therefore crucial in promoting even regional economic development.

REI is a complex process which will only succeed once certain conditions are met. Structural stability, the rule of law, and institutional capacities at national and regional levels are equally important to macro-economic stability and proper infrastructure. The willingness to give up parts of national sovereignty is another crucial success factor: Each member state of a REI process needs to be convinced that it will benefit from integration. Hence, REI is a challenging process which needs patience, well-organized management and long-term efforts to achieve tangible results and to maximize benefits.


GFA concept and services

The GFA concept aims at enabling developing countries to improve their capacities in complying with the obligations and taking advantage of the opportunities arising from REI. The core competence of GFA teams lies in the two fields outlined below.

Institutions and human capacities      We help building capacity at the level of regional institutions and national governments to enable countries coping with the new tasks and challenges arising from REI. GFA experts support designing institutional set-ups and legal frameworks. They also assist these institutions in implementing free trade agreements related to goods, services, and investments. Another major task is upgrading customs services and harmonizing rules of origin and national standards. Also, GFA experts assist in the implementation of policies supporting REI. These can be competition, fiscal and monetary policies as well as investment and finance regulations, and tax regimes.

Assistance to the private sector      The benefits of regionalization materialize through private sector initiatives. Therefore, supporting the private sector in identifying and taking advantage of the emerging opportunities is a key task. Moreover, GFA experts prepare the regional business community for transitional challenges arising from the integration into regional markets such as increased competition and decreased protection of national industries. One way to support the private sector is establishing business intelligence organizations at national and regional levels that disseminate relevant information about changing conditions and business opportunities. This is often combined with value chain promotion to include national products and services into regional value chains. Another instrument of private sector promotion in this context is the active involvement of the private sector in the negotiation process of regional agreements.