Other developments and challenges: looking beyond the Customs Union. This rise has been propelled by the strategic location it holds among global shipping lanes and the relatively low costs of shipping as a means of transporting goods internationally. II. Progress on domestic economic reforms could also have a bearing on the Indian Ocean’s outlook. Free trade area.This is the most basic form of economic cooperation. Large reserves of hydrocarbons are being tapped in the offshore areas of Saudi Arabia, Iran, India, and Western Australia. A greater fall from 7.6 per cent to just 2.8 per cent is visible when assessed using the weighted average tariff rate, which weights the tariff applied to each good by that particular product’s importance in trade flows. This site uses cookies. The period 1960-1980, however, witnessed the emergence of the major regional integration schemes that pushed forward the Continent’s economic integration agenda. These experiences are at an early stage and yet they already contain lessons for other parts of the world. However, inter-country comparisons of the quality of port infrastructure are difficult due to measurement problems, statistical gaps and the inherently subjective nature of such evaluations. CARICOM is one of the oldest integration schemes in the Western Hemisphere, the largest in terms of membership, yet by far the smallest in economic and geographic terms. 8OECD, FDI Restrictiveness Index. More fundamentally, skills deficits and difficult business environments deter export-oriented FDI that would allow LDCs to engage in trade in higher value-added sectors. 5The simple average tariff level is the unweighted average of the effectively applied tariff rates for all products. of the earth’s total water and its land area, covering 17.5 per cent22Authors calculations based on data from the Food and Agriculture Organization. The CMI hosted the fourth Rencontre Valmer to discuss the challenges of regional economic integration through the lens of the Golden Growth Report. Given the diversity of the Indian Ocean economies, it is perhaps inevitable that the quest for Indian Ocean economic regionalism is likely to remain ‘institution light’ for the foreseeable future. See, ADB (2010) and Wignaraja (2014). Similarly, the weighted tariffs are higher on agricultural goods than manufactures and minerals. 1 pg. Some MICs also lack the requisite technical knowledge to build institutions for fostering trade-led growth such as world class ports and bodies for negotiating comprehensive free trade agreements (FTAs). Regional economic blocs are not new. For many of us from outside Latin America, the dynamics of ALBA hold particular interest. The challenges of regional integration in Southern Africa Mark Chingono* and Steve Nakana University of Zimbabwe, P. O. A particular specific aim of the project is to discuss, analyze, and critically evaluate diverse issues related to economic … The IODF’s mandate, financing, governance, staffing and project activities should be guided by best international practices in regional development banks. March 2009. A large amount of research in this area is focused on the growing strategic and economic rivalry between India, the largest Indian Ocean littoral state and China (Bastos, 2014; Brewster, 2014; Chaudhury & Basu, 2016), though Mohan (2017) and Mendis (2012) have also considered the strategic importance of the Indian Ocean for Europe and the United States, respectively. The East Asia and Pacific sub-region contributed 5.1 per cent of global GDP in 2017, while South Asia, and the Middle East and Africa, contributed 3.8 per cent and 1.8 per cent, respectively. Source: LKI calculations based on IMF (2018c). Container traffic through its ports has increased fourfold from 46 million TEUs in 2000 to 166 million TEUs in 2017, and is on course to reach over 190 million TEUs by 2020 (see Figure 2). Asian Development Bank, Asian Economic Integration Report 2018 Toward Optimal Provision of Regi... UNESCAP and UNCTAD, Asia-Pacific Trade and Investment Report 2019: Navigating Non-tariff Measur... Ecosystem-based fisheries management and the precautionary approach in... Asian Development Bank (ADB) & Asian Development Bank Institute (ADBI) . challenges of African regional integration. Another is the subsidization of the oil needs of 14 Caribbean countries by Venezuela, which sells fuel to them at 40 per cent off the world price. Nonetheless, the numbers of NTMs initiated and notified to the WTO by Indian Ocean economies increased steadily from 128 to 348 between 2000 and 2010 and still further to 686 in 2017.66LKI calculations based on WTO (2018). March 3-4, 2016. Login failed. Available online: https://www.worldatlas.com/articles/the-oceans-of-the-world-by-size.html (accessed on 26 July). Amidst fiscal constraints, many Indian Ocean economies need to undertake public investment in port development and customs modernisation. In terms of sub-regions, South Asia is the slowest, with an average of 73.2 hours while Africa and the Middle East is the fastest with an average of 62.3 hours. Overall Indian Ocean container traffic was equivalent to 22 per cent of global container traffic in 2017. Regional ... regional integration efforts address multiple challenges at a time. Another step would be to encourage linking the various sub-regional and bilateral FTAs in the region to a mega-regional trade agreement with common trade rules and standards. Those challenges include socio-economic inequality within the country and the region, and the lack of policy coordination and national capacity in implementing regional projects. However, this research seems relatively dated. The Indian Ocean is an increasingly important component of the world economy. HEADQUARTERS Gamage (2016) and Hussain, Failler, Karim, and Alam (2017) explore the use of this idea in Southeast Asia and Bangladesh, respectively. … Key actions would include (a) investing in port development and customs modernisation through national and mega-regional initiatives, (b) gradually reducing barriers to trade and investment, (c) setting up an IODF to support LDC participation in trade-led growth and to facilitate knowledge transfers to MICs, and (d) strengthening regional economic governance through appointing an EPG on IORA and linking sub-regional and bilateral FTAs to RCEP. Regional integration is viewed as a significant initiative with regard to stimulating economic growth amongst member states and enhancing intraregional trade, security initiatives, and bilateral and multilateral agreements. Its fish are of great and growing importance to the bordering countries for domestic consumption and export. Except where otherwise noted, content on this site is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. 2. In Africa in particular, there has been a clamor and trend towards integration with numerous regional blocs being formed in various regions of the continent. It has given nations the options of cooperation and competition. A case thus exists for external development assistance and knowledge transfer to support the middle-income transition in the Indian Ocean economy. 7https://www.wto.org/english/tratop_e/serv_e/cbt_course_e/c1s3p1_e.htm. Source: LKI calculations based on World Bank (2018b) and IMF (2018d). The EAC seems to be the most vibrant Regional Economic Community (REC) in the Southern hemisphere and is tremendously advancing in its integration process: however, crucial … Let me mention some of these challenges to contemporary regionalism in Latin America and other parts of the South. The article reviews the economic effects of such agreements on member countries and on the world trading system. Challenges to regional integration: the case of SADC By Henning Melber∗ At the beginning of the 21st century, Swedish authorities drafted and ultimately adopted (on 27 June 2002) a “Swedish Strategy for Support for Regional and Subregional Development Cooperation in Sub-Saharan Africa” as a framework for the period until 2006. Table 2 provides one such evaluation from the World Economic Forum’s Global Competitiveness report based on a survey of global business leaders’ perceptions and available hard data on ports. What Is Regional Economic Integration? Regional integration in Africa : Challenges and prospects* A contribution to the Handbook of Africa and Economics Jaime de Melo Yvonne Tsikata Abstract Political motives, geography, and the uneven distribution of gains trumped the traditional efficiency gains across Africa’s Regional Economic Communities (RECs). Data is problematic as economies fail to report NTMs to the WTO and difficulties exist in quantifying the relative significance of different NTMs. Mohanty et al. Trade has fundamentally shaped the Indian Ocean economy throughout history, but this has been especially true since the turn of the 21st century. This includes the 21 members of the Indian Ocean Rim Association (IORA), plus Brunei, Cambodia, the Maldives, Myanmar, Pakistan, Timor-Leste and Vietnam. A trade upswing has driven rapid economic growth that has reduced poverty and increased per capita incomes. Today, the Indian Ocean hosts 23 of the world’s top 100 container ports.33According to the 2017 Lloyd’s List Top 100 Container Ports Rankings. aspects of the Trade Protocol in some detail, as it is the heart of regional integration and ends with the cooperation between SADC and the International Cooperating Partners. Benefits of Regional Economic Integration. Significant economic progress over recent decades notwithstanding, development disparities and capacity gaps remain between Indian Ocean economies (see Figure 10). Source: LKI calculations based on Ad Valorem (2016), UNCTAD (2018), World Bank (2018c). 10This accounted for 15.9 per cent of world ODA flows in 2016, but is less than US$ 10 per person. Moreover, SMEs located in LDCs lack international competitiveness and the ability to join global value chains. Further research by think tanks seems warranted on the feasibility and terms of reference of the IODF. While there is no agreed definition of this concept (Doyle, 2018, p. 1), environmental sustainability is a central focus. Please read and accept the terms and conditions and check the box to generate a sharing link. Similarly, the Indian Ocean economy’s share of global GDP (at purchasing power parity [PPP] exchange rates) is expected to rise from 18.5 per cent to 22.1 per cent between 2017 and 2025. Somalia, Yemen. Despite the numerous efforts by African states to form regional trading blocs, existing Regional Economic Communities (RECs) in Africa have not been successful achieving their intended objectives of poverty reduction and economic development. A conscious effort to expand economic and political space as well as the needed instrument to strengthen integration in Africa. Reflecting the expansion of maritime trade in the Indian Ocean, trade volumes with the world have grown rapidly. of the integration process, and the current challenges. If you have access to a journal via a society or association membership, please browse to your society journal, select an article to view, and follow the instructions in this box. He goes so far as to call IORA ‘a regional non-starter’ as its members are too diverse and geographically scattered for any meaningful integration to take place. While the diversity of the region presents an opportunity for mutually beneficial trade based on each country’s comparative advantage, development gaps impede LDCs from fully engaging in trade-led growth. 1. It evaluates the challenges and prospects of integration in West Africa. In the wake of its historic anniversary, many have reflected on the Community's past achievements and future prospects. Especially strong integration -- like the European Union -- can lead to the loss of unique minority cultures within a region. Another response, complementary to this, has been to build regional associations or regional blocs. Macroeconomic monitoring occurs at the economy level but these national exercises are combined under different regional headings (International Monetary Fund [IMF], 2018a, 2018b). Source: LKI calculations based on IMF (2018d). Note: Data not available for Comoros, Iran, Somalia and the Maldives. The international research project “Challenges and Opportunities of Economic Integration within a Wider European and Eurasian Space” focuses on plausible futures of economic cooperation in the Greater Eurasian space and interplay between different integration processes in the region. In East Asia and the Pacific, the share of total trade with other Indian Ocean sub-regions has increased from 3.5 per cent to 6.1 per cent during the same period, while in Africa and the Middle East, it has increased from 15 per cent to 18.8 per cent. Members of _ can log in with their society credentials below, Ganeshan Wignaraja, Adam Collins, and Pabasara Kannangara. 4th Floor Wisit Prachuabmoh Building Source: Created by the Lakshman Kadirgamar Institute (LKI) using mapchart.net. Economic integration, or regional integration, is an agreement among nations to reduce or eliminate trade barriers and agree on fiscal policies. 2. 11A full assessment of regional organisations in the Indian Ocean is available in Wignaraja Collins, and Kannangara (2018). Institutional strengthening and free functioning of market rules. LDCs are thought to be vulnerable to economic and environmental shocks and have low levels of human development. Bellish (2013) estimated that Somali piracy cost the global economy US$ 5.7–6.1 billion in 2012 due to the additional cost of items such as security, insurance and re-rerouting of ships. After a literature review in the second section, this article undertakes three related empirical tasks on the period since 2000. These agreements are usually made between nations with smaller economies in order to promote trade within the region. Regional economic integration has enabled countries to focus on issues that are relevant to their stage of development as well as encourage trade between neighbors. The first is how to build regional blocs that go beyond trade to include industrial policy, a shared agricultural policy, macroeconomic coordination, and technology sharing. Find out about Lean Library here, If you have access to journal via a society or associations, read the instructions below. The simple average tariff rate55The simple average tariff level is the unweighted average of the effectively applied tariff rates for all products. Regional Economic Cooperation and Integration in Africa 3 III. Furthermore, with the exception of some major economies (such as India, Indonesia and Singapore), most Indian Ocean economies are absent from a medium-term economic perspective studies (see Asian Development Bank [ADB] & Asian Development Bank Institute [ADBI], 2014; Kearney, 2015). Regional economic integration has enabled countries to focus on issues that are relevant to their stage of development as well as encourage trade between neighbors. A value of 7 in the scoring system used shows the best possible situation and 1 the worst. Civil society must not only provide a check to both the state and the market, but it must be the leading force in the new economics. Further complicating matters, 52 bilateral investment treaties between countries in the Indian Ocean formalise rules for bilateral investment, as well six additional bilateral FTAs or economic cooperation agreements that contain investment provisions.1515Based on UNCTAD’s international investment agreement database. COMESA and SADC: Prospects and Challenges for Regional Trade Integration Prepared by Padamja Khandelwal1 Authorized for distribution by Hans Peter Lankes December 2004 Abstract This Working Paper should not be reported as representing the views of the IMF. This paper examines the challenges and prospects of African regional integration with the focus on Southern Africa. It finds that the strategically located Indian Ocean economy has become an increasingly important part of the global economy in the past two decades and has become more integrated within itself. For analytical convenience, these economies are grouped into three geographical sub-regions: Africa and the Middle East, South Asia, and East Asia and the Pacific (see Figure 1). By continuing to browse Other developments and challenges: looking beyond the Customs Union. This paper therefore, examines the current African integration efforts in the age of globalisation in a bid to show the current development and future challenges. 1Estimated from the World Atlas. Economic Integration: Meaning, Types, & Benefits of Economic Integration October 18, 2019 By Hitesh Bhasin Tagged With: Management articles The industry works at a different pace in the present times, and there are certain techniques which can be used only in case there is a particular economic angle provided to it in the first place. We are intrigued by the comment of President Hugo Chavez during the World Social Forum in Caracas in 2006 that these practices “go beyond the logic of capitalism.” Yet we cannot romanticize these efforts. Economic integration, or regional integration, is an agreement among nations to reduce or eliminate trade barriers and agree on fiscal policies. The rest of the world is not discriminated 6. The fifth is how to avoid a technocrat-led process and promote instead the democratization of decision-making in all areas of the economy. At a sub-regional level, the quality of ports in South Asia (4.2) and Africa and the Middle East (4.2) are slightly ahead that of East Asia and the Pacific (4.1). Goods and services trade links within the region and beyond have deepened to an unprecedented extent. Create a link to share a read only version of this article with your colleagues and friends. Cordner (2010, p. 69) highlights the importance of the Indian Ocean for the energy security of many major economies as more than half the world’s oil passes through the region, and Alden (2009) considers the governance implications of China’s growing interests in Africa’s natural resources. Furthermore, despite IORA only being established in 1997, Kelegama (2002) discusses how the interest of many of the major players was already fading by the early 2000s. For instance, it can take as much as 22 days on average to start a business in the Indian Ocean economy compared with only 8 days for the OECD (see Table 2). He is the author of 15 books, the latest of which is The Food Wars (New York: Verso, 2009). ASEAN Studies Center, Chulalongkorn University, Thailand, The Indian Ocean and the rise of a multi-polar world order: The role of China and India, Beyond the string of Pearls: Is there really a Sino-Indian security dilemma in the Indian Ocean, Rethinking maritime security in the Indian Ocean region, International Labour Organisation and Brussels: European Commission, ‘Blue economy’ in Southeast Asia: Oceans as the new frontier on economic development, Major opportunities of ‘Blue Economy’ development in Bangladesh, Indian Ocean regionalism: Is there a future, The Sri Lankan Silk Road: The potential war between China and the United States, Research and Information System for Developing Countries, Maritime Transport Database: Foreign direct investment: Inward and outward flows and stock, annual, Maritime security and the ‘blue economy’: Intersections and interdependencies in the Indian Ocean, Will South Asia benefit from Pan-Asian integration, Japan’s export of infrastructure systems: Pursuing twin goals through developmental means, ASEAN-India Centre & ASEAN Studies Center-Thailand, Challenges to Regional Economic Integration, Opportunities and Challenges for Regional Economic Integration in the Indian Ocean, Asian Development Bank [ADB] & Asian Development Bank Institute [ADBI], 2014, https://www.worldatlas.com/articles/the-oceans-of-the-world-by-size.html, https://www.wto.org/english/tratop_e/serv_e/cbt_course_e/c1s3p1_e.htm, http://www.oecd.org/investment/fdiindex.htm, https://www.un.org/development/desa/dpad/least-developed-country-category/ldcs-at-a-glance.html, https://saiia.org.za/research/china-and-africas-natural-resources-the-challenges-and-implications-for-development-and-governance/, http://oceansbeyondpiracy.org/publications/economic-cost-somali-piracy-2012, https://www.cgdev.org/sites/default/files/examining-debt-implications-belt-and-road-initiative-policy-perspective.pdf, http://data.imf.org/?sk=9D6028D4-F14A-464C-A2F2-59B2CD424B85, http://www.imf.org/external/pubs/ft/weo/2018/01/weodata/index.aspx, https://www.atkearney.com/web/global-business-policy-council/article?/a/-2020-seven-growth-economies, https://www.gppi.net/2017/11/02/engaging-with-the-indian-ocean, https://stats.oecd.org/Index.aspx?datasetcode=FDIINDEX#, https://www.stimson.org/content/maritime-commerce-and-security-indian-ocean, https://unctad.org/en/PublicationsLibrary/ditcted 2014d5_en.pdf, http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx, https://www.unescap.org/publications/unlocking-potential-regional-economic-cooperation-and-integration-south-asia-potential, Retrieved from https://www.lki.lk/publication/indian-ocean-rim-association-scaling/, http://www.pmoffice.gov.lk/download/press/D00000000050_EN.pdf?p=7, https://www.odi.org/publications/11202-asia-2025-development-prospects-and-challenges-middle-income-countries, https://openknowledge.worldbank.org/bitstream/handle/10986/26843/115545.pdf?sequence=1&isAllowed=y, http://iresearch.worldbank.org/servicetrade/, http://www.doingbusiness.org/data/exploretopics/trading-across-borders, https://www.wto.org/english/res_e/statis_e/statis_e.htm. Some workers face temporary unemployment and income losses through lost jobs to international competition. The email address and/or password entered does not match our records, please check and try again. These are (a) port and customs quality, (b) barriers to trade and investment, (c) development gaps, and (d) nascent regional economic governance. In grappling with the challenges facing regional integration efforts in Africa, advocates of greater unity have identified a number of other requirements for success: The Indian Ocean economy grew by an annual average of 5.6 per cent per year during 2000–2008 and slowed slightly to an average of 5.1 per cent in 2011–2017, led by a strong performance in South Asia (see Figure 4). A. Cumbers, in International Encyclopedia of Human Geography, 2009. However, some of the more prominent ones have either not moved beyond a primitive stage, as in the case of SAARC in South Asia, or have been based on neoliberal principles, like ASEAN in Southeast Asia. Debates about the African integration agenda and indeed Africa’s strategy for integration into the global economy are emerging from these negotiations, which are still ongoing. the site you are agreeing to our use of cookies. This would increase market access, reduce trade barriers and facilitate regulatory coherence. In East Asia and the Pacific, intra-sub-regional has fallen slightly from 22.1 per cent to 21 per cent, though based on this indicator, it is still the most integrated sub-region in the Indian Ocean. View or download all the content the society has access to. 9 DRC is member to at least 4 REC’s. You can be signed in via any or all of the methods shown below at the same time. For instance, in 2025 South Asia is likely to account for 12.1 per cent of global GDP, East Asia and the Pacific for 7.1 per cent, and Africa and the Middle East for 2.9 per cent. These inter-governmental institutions have limited powers delegated by members, lack formal rules or legal structures, have inadequate financial resources and lack permanent secretariats. Research has also looked at the specific economic cost of non-traditional security threats in the Indian Ocean, particularly piracy off the coast of Somalia. Source: LKI calculations based on World Bank (2018a) and IMF (2018d). It could also give special priority to projects that foster regional integration efforts between one or more economies across the Indian Ocean’s three sub-regions (e.g., projects between African and South Asia economies). Gradually reducing barriers to trade and investment would support trade-led growth in the Indian Ocean. 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