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Benefits of regional integration for economic revival Has it been successful?

Benefits of regional integration for economic revival Has it been successful?. Namibia Economist Business Forum Windhoek 14 July 2004. Agenda. Introduction World Systems Theory Economic Integration Failures and Successes Regional Integration NEPAD’s role Summary. Introduction.

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Benefits of regional integration for economic revival Has it been successful?

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  1. Benefits of regional integration for economic revival Has it been successful? Namibia Economist Business Forum Windhoek 14 July 2004

  2. Agenda • Introduction • World Systems Theory • Economic Integration • Failures and Successes • Regional Integration • NEPAD’s role • Summary

  3. Introduction • Aim to determine success of regional integration for economic prosperity • Some degree of economic integration necessary condition for regional survival • SA at heart of regional economic development • Any arrangement pre-1994 designed to compensate SA’s neighbours for cost of apartheid destabilisation would have been deemed to failure

  4. World Systems Theory • World Systems Theory: 3 types of national economies: • More Developed Capitalist Countries (MDCs) • State Socialist Countries (SSCs) • Less Developed Capitalist Countries (LDCs) • Coexist within and part of world economy • Has 3 components:

  5. World Systems Theory

  6. Defining Economic Integration “Kind of shorthand which describes the degree of dissemination which is eliminated by parties to such an arrangement”

  7. Types of Economic Integration

  8. Lower Levels of Economic Integration • Number of facilitating factors will remain within ambit of individual nation states • Macro-economic policies • Ensuring physical infrastructure exists for trade • Responsibility to make itself attractive to investors

  9. Prescriptive Aims of Regional Integration • Relate directly to struggle against under-development and dependence: • Attain enormous economies of scale • Reduce the risk of export diversification by replacing mono-culture nature of individual states with collective regional one • Increase bargaining power vis-à-vis developed core and enhance economic independence

  10. Economic Development • Economic development ultimate justification for regional economic integration • Is thus theory by which success or failure is judged

  11. Regional Integration • Two issues are clear: • Regional integration occur on number of levels • Aims, objectives and justifications consolidated around two pillars • Economic development that benefit all member states • Weakening of pattern of economic dependency

  12. Factors Influencing Regional Integration • Political support for individual states • Role of external influences • Ability of architects to demonstrate concrete benefits to members • Degree of match between regional interests and national development strategies

  13. Co-operation in Sub-Saharan Africa • Transport and communication • Agriculture, science and education • Environmental affairs • Sub-continental power grid • Water Projects

  14. Intra-Regional trade • Co-ordinating intra-regional trade settlement arrangements • Greater utilisation of improved physical links • More conclusive fiscal arrangements

  15. Failure - COMESA

  16. Success - SACU

  17. Experience in Africa • Limited success • ECOWAS – some success • COMESA, SADCC/SADC – less successful • SACU – most successful

  18. Success Outside Africa

  19. Reasons for Failure • Too big and bold to start with • Implementation becomes major problem • Issues of sovereignty

  20. Benefits of Regional Integration • Economies of scale • Harmonisation of various standards, requirements, laws etc. • Reduce national bureaucracies • Greatly reduce political tensions • Facilitate free flow of goods, capital, services and people • Real benefit: freedom to private sector to supply goods and services

  21. Role of NEPAD in Regional Integration • Largely undefined • Clear recognition that: • Promotion of international trade • Development assistance • Investment • Direct material and financial aid require regional rather than national boundaries • International community have urged Africa for years to band together

  22. Summary • NEPAD has to play crucial role • Would make dealing with international community easier • AU role also remains undefined • Clear course to follow: • Regional economic arrangements only viable way to create economic prosperity

  23. Thank you! Noelani King Conradie NKC Independent Economists +27 (0)21 872 4476 +27 (0)82 8544 130 noelani@nkc.co.za

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