For Africa, with its small, fragmented economies, regionalism may be a question of survival in the new global economy (UNECA 2000a). More than other regions, Africa needs to integrate subregional markets, promote sustainable development, and build the capacity and competitiveness to participate meaningfully in the emerging multilateral trading system.
Realizing the benefits of regional integration requires strong, sustained commitment from member countries
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But to tackle its development challenges effectively, Africa needs multilateralism as well as regionalism. African countries should promote regionalism to enlarge mar-kets and exploit economies of scale. And they should participate fully in the WTO process to benefit from market access and gain safeguards against unfair protection-ist measures.
Regionalism in Africa can promote multilateralism in several ways:
• By going beyond the narrow issues of trade and global welfare to measures promot-ing foreign investment, human capital, technological development, infrastructure development, efficient exploitation of natural resources, and effective responses to environmental challenges.
• By acting as a restraint that locks in welfare-enhancing trade reforms.
• By creating larger political economy units that can bargain more effectively in international forums.
• By building pro-export constituencies to counter domestic protectionist constituencies.
• By increasing competition in domestic markets, lowering prices, improving qual-ity, and making products that are more competitive in global markets.
By strengthening regional integration, Africa would move towards being an integral part of the world economy and avoid further marginalization. But much work is needed to ensure that Africa’s regional integration arrangements conform to WTO require-ments under Article XXIV of the GATT. So, one challenge for Africa is ensuring a harmonious coexistence of subregional arrangements with the multilateral system to which the majority of African countries now belong.
Another challenge is building the capacity of African countries to compete in the mul-tilateral trading system. The expansion of WTO membership, particularly after the recent admission of China, will increase the competition African products face in world markets. To compete effectively, African countries should gear their integration pro-grammes to take advantage of the opportunities opened by globalization, promoting cross-border links among production units to prepare for participation in globally linked production processes. African countries and subregional groups should explore opportunities for expanding exports through export promotion efforts where prospects are promising.
Despite the loss of special preferences due to trade liberalization, African countries should try to maintain export shares in traditional agricultural products, including sugar and tropical beverages, by improving production technology and easing supply con-straints. They should also increase exports of processed agricultural goods and raw materials by promoting investment in production improvements and removing bottle-necks to domestic processing, such as inadequate infrastructure, unsatisfactory mar-keting arrangements, and unattractive foreign exchange regulations.
By strengthening regional integration, Africa would move towards being an integral part of the world economy
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Integration arrangements between industrial and developing countries can yield sub-stantial benefits to the poorer partners. Industrial countries should help African coun-tries link up with them more effectively and be more effective players in the global economy. International organizations can help by encouraging such integration.
Conclusion
Revitalized regional integration offers the most credible strategy for tackling Africa’s development challenges, internal and external. Why? Because of the many weaknesses that overwhelm the limited capacities and resources of individual countries. Collective efforts, with dynamic political commitment to integration, can help overcome the daunting challenges.
Revitalizing integration efforts will require a thorough assessment of integration per-formance at the national, regional, and continental levels, taking into account new con-tinental and global realities. The assessment should evaluate progress, gauging the performance and capacity of national, regional, and continental institutions for regional integration. The assessment should also evaluate policies on regional integration.
Lessons from the assessment will guide future action.
A relevant question is how much—if at all—regional economic communities have helped overcome the development challenges facing African countries. A key objective must be to expand opportunities for investment that increase African incomes and tap unexploited resources—reducing dependence on the outside world and creating con-ditions for self-sustained, autonomous development. Such development can come about only by transforming Africa’s production structures. As things stand it is debat-able whether regional economic communities have contributed to these changes, to the socioeconomic transformation of African economies, to the reduction of mass poverty through sustained growth, and to the creation of an African common market leading to an economic community.
Understanding the role of cooperation and integration in meeting the challenges of African development also requires going beyond these issues to objectives not strictly covered by regional economic communities. Peace and security, environmental issues, and Africa’s global commitments cannot be divorced from the concerns of regional integration. In some parts of Africa conflicts and instability have stalled regional inte-gration. HIV/AIDS, malaria, and other infectious diseases threaten to thwart integra-tion in much of the continent. And globalizaintegra-tion poses enormous challenges to Africa’s economic prospects. All these issues must be included in an assessment of regional inte-gration in Africa.
Revitalized regional integration offers the most credible strategy for tackling Africa’s development challenges, internal and external
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Notes
1. Functional regional cooperation—cooperation among countries to achieve specific tasks such as regional infrastructure development or cross-border natural resource shar-ing—can generate some of the potential benefits of regional integration. Such cooper-ation can be viewed as a restricted variant of regional integrcooper-ation and can occur independently or in the context of a formal regional integration arrangement.
2. Such arrangements can be differentiated according to the economic characteristic of the countries in the partnership: among industrial countries, among developing countries or between industrial and developing countries; see El-Agraa 1997 and World Bank 2000b.
3. Viner 1950; DeRosa 1998; Anderson and van Wincoop 2000; Panagariya 2000.
4. For a survey of the empirical literature, see DeRosa 1998; Robinson and Thierfelder 1999; Venables 2000; Lewis and others 2002.
5. The reported gain also includes the scale and competition effects noted later.
6. The gains are computed as the difference between GDP with and without regional integration of the kind specified and expressed as a percentage of GDP without integration.
7. The general case for regional cooperation, and the role of regional integration arrangements in promoting it, are discussed in World Bank (2000b), while Bond (1997) analyzes regional investment in transport infrastructure.
8. UNECA 1989; Sachs and Warner 1997; Easterly and Levine 1997; Collier and Gunning 1999; World Bank 2000a.
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