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 between different types
such as physical and regulatory infrastructure, and providing more
evidence of the complementarities between both types to ensure the
benefits of reduced trade costs pass through to poor producers and
The 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 highlights the relevance of focusing on the regional dimension: the
traditional reason is to tackle geographical constraints by bringing
together many small economies and landlocked countries. But other
reasons identified include the fact that international production
networks are often centred on regions. Also, regionally traded goods and
their related activities are more employment-intensive than goods traded
further away. However, addressing infrastructure at the regional level
is not without challenges. There are vested interests and other
political economy considerations involved, such as: (i) appropriation of
benefits versus costs of investing in hard infrastructure; (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,
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 also 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
impacts on the productivity of African firms.
Economic actors will only benefit from new hard infrastructure 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.
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
The research suggests RITF is good for growth and productivity, but
there are several ways in which policy can enhance these effects:
- Policy should focus not only on the quality of regional hard
infrastructure, such as roads and ports, but also on other factors
such as soft infrastructure, to increase transparency and the
efficiency of trade-related services for all firms. In particular, it
should focus on innovative regulations to address coordination failure
in value chains.
- Policy should also remove barriers to efficiency of trade logistics
services, in particular for transit, such as licensing and service
restrictions, restrictions on the employment of labour, limitations on
access to infrastructure facilities, cabotage restrictions, cargo
reservation schemes and third country rules, or ownership and
Policy can also improve the impact of RITF for the poorest and reduce
the risks they may face:
- Policy needs to help sustain the reduction in spatial inequalities
from RITF by supplying complementary infrastructure such as rural
feeder roads, as well as health and education services. This could
foster the development of new hubs of economic activity.
- It is important to design temporary programmes to support those
affected negatively by one-stop border posts and help them change to
other types of activities.
- Better integration into international production networks is welcome,
but complementary policy is needed to give smaller firms the
opportunity to participate, directly or indirectly.
Jouanjean, M-A.; te Velde, D.W.; Balchin, N.; Calabrese, L.; Lemma, A. Regional Infrastructure for Trade Facilitation: Impact on Growth and Poverty Reduction. ODI, London, UK (2016) 119 pp.