Policymakers’ expectation that regional integration for trade
facilitation (RITF) will help growth and poverty reduction is well
founded in theory, but has not been matched by clear evidence from the
evaluation and research communities. This project contributes to the
body of research inspiring better evaluation and policies related to
RITF. It unpacks infrastructure, distinguishing among different types
such as physical and regulatory infrastructure. In particular, it
provides more evidence of the complementarities between both types of
infrastructure to ensure the benefits of the reduction in trade costs
pass through to poor producers and consumers.
The main report provides evidence on the impact of regional
infrastructure and associated trade cost reduction on the behaviour,
risks and opportunities of economic actors (households, firms) through
direct and indirect routes. It does this by creating and using new
infrastructure measures; undertaking original surveys and new
regressions; and developing and testing a new theory of change. It also
highlights the relevance of the regional dimension. However, addressing
infrastructure at the regional level is not without challenges, as
vested interests and other political economy considerations are
involved, such as: (i) appropriation of benefits versus costs of
investing in hard infrastructure regionally; (ii) appropriation of
benefits by intermediaries and competition in logistics services; and
(iii) the challenge of addressing non-tariff measures.
Investment in RITF is shown to enhance economic activity around borders,
thereby reducing spatial inequalities within African countries. It also
supports the informal sector at the border, in particular informal
traders. But to increase the benefits, cross-border infrastructure
should take into account their specific characteristics. There are
potentially negative effects on the livelihoods of the most vulnerable,
for whom specific initiatives can support adaptation to the new economic
environment. RITF also facilitates integration into modern value chains
and international production networks. Finally, RITF has positive and
long-lasting impacts on the productivity of African firms.
The new hard infrastructure occurs gives benefit only when complementary
regulations allow for efficient trade logistic services. In particular,
innovative regulations and infrastructure should address coordination
failures in modern value chains and tackle obstacles such as
localisation barriers to reduce competition in the logistics sector.
Taken together, the evidence suggests most of the impacts on growth and
poverty reduction are indirect and require an understanding of
constraints to connectivity throughout value chains. Hence, policymakers
should take greater care of accounting for these in policy decisions and
evaluations of RITF.
Jouanjean, M-A.; te Velde, D.W. Briefing: Regional Infrastructure for Trade Facilitation &#8211; Impact on Growth and Poverty Reduction. ODI, London, UK (2015) 3 pp.
Briefing: Regional Infrastructure for Trade Facilitation – Impact on Growth and Poverty Reduction