The Southern African development community

Economic integration, which brings with it an increasing division of labour and a dense network of linkages between firms within and across sectors and regions, is not simply the result of market forces, nor can it be “engineered” in an open society by State planning and intervention. This is true for integration at the national level as much as at the regional and international levels. Market dynamics, private-sector production and investment decisions, and attitudes of governments to different forms of economic cooperation with their neighbours all play a role; but regional integration processes are also conditioned by structural characteristics and the complementarity of the economies of a region, the compatibility of national economic policies, as well as the overall macroeconomic environment. This explains why formal regional cooperation in trade and finance can be associated with very different degrees of effective regional integration, and why such integration has sometimes occurred among countries without prior conclusion of formal trade arrangements or other far-reaching policy cooperation. Moreover, some areas of coordinated or common policy action at the regional level may be as important as trade liberalization, depending on the specific conditions in the different regions. This chapter discusses various examples of such policies, from developing and developed countries.

Related Subject(s): International Trade and Finance
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