Working Paper 62 - Policies for Regional Integration in Africa

Abstract

The paper agues that experience and empirical evidence have shown that Africa’straditional trade-focused model of regional integration has failed not only in promotingintra-regional and African trade but also economic growth. However, regional integrationremains a basic ingredient towards the attainment of high and sustainable economic growthin the continent. To realize this potential, there is therefore, the need to search for newmodalities of regionalism that lean more towards co-operation, less rigidity and morepragmatism. The paper suggests that the principles of variable geometry and subsidiaritycould be usefully applied in this more pragmatic modality for defining the functions andpowers of the various layers of the new regional co-operation institutions. The principle ofvariable geometry permits integration to proceed on the basis of progressive steps, allowingsmaller sub-groups to move faster than the whole group while providing that many decisionsbe made by the majority rather than by consensus. On the other hand, the subsidiarityprinciple provides a clearer basis for distributing powers and responsibilities across severallayers (from national to regional) of the organizational structure of a regional integrationscheme according to the comparative advantage of each in respect of the different functions.These new co-operation arrangements have important contributions to make in helping todevelop African infrastructure and thus in reducing the region’s unusually high transactionscosts, which inhibit trade, investment, and economic growth. They could also play a majorrole by assisting African countries to establish a stable macroeconomic policy environmentthrough regional co-ordination and harmonization of macroeconomic and sectoral policies,trade, and growth- and investment-enhancing institutions. In addition, in an era ofglobalization, the multilateral approach to the fuller integration of African countries into theglobal economy is a sine qua non. To derive the most benefit from this approach, Africancountries must not only participate more actively and effectively in the World TradeOrganization (WTO) process, they also need to accept and implement appropriate tariffbindingobligations.