Regional infrastructure for trade facilitation (RITF) is an important feature of regional integration that has recently gained importance in policy circles. While regional integration is viewed as a tool to foster growth and poverty reduction, tensions are recognised within the literature, including potential increased economic volatility, economic divergence amongst countries, and increased inequalities within countries.
This paper reviews the literature describing the pathways of impacts between regional infrastructure, growth and poverty. The paper first discusses the importance and relevance of addressing trade constraints at the regional scale; then it gathers evidence from the literature about the pathways of impact of the reduction of trade costs resulting from investments in regional infrastructure; finally it reviews evidence on growth and poverty reduction looking at the effects at both micro and macro scales.
Regional integration and in particular deep regional integration has a crucial role in reducing trade costs and supporting growth and poverty reduction, through both hard and soft infrastructure. RITF has an obvious role in supporting landlocked countries’ access to international markets. Our review of the evidence at the micro and macro levels suggests there is a general consensus on the positive role of infrastructure investments in fostering growth and reducing poverty. However, there is a lack of specific studies on the effects of regional infrastructure. Moreover, the literature emphasises the importance of not only hard infrastructure but also the development of soft infrastructure (e.g. relevant transport services) for inclusive growth.
Jouanjean, M-A.; Gachassin, M.; te Velde, D.W. Regional infrastructure for trade facilitation &#8211; impact on growth and poverty reduction: A literature survey. ODI, London, UK (2015) 67 pp.