Presentation is loading. Please wait.

Presentation is loading. Please wait.

Mozambique and Regional Integration in Southern Africa Sherman Robinson Institute of Development Studies University of Sussex November 2007.

Similar presentations

Presentation on theme: "Mozambique and Regional Integration in Southern Africa Sherman Robinson Institute of Development Studies University of Sussex November 2007."— Presentation transcript:

1 Mozambique and Regional Integration in Southern Africa Sherman Robinson Institute of Development Studies University of Sussex November 2007

2 2 Outline Evolution of trade blocs: 1960s-1990s Composition of trade Regional Trade Agreements –Shallow and deep integration SADC/SACU and Mozambique Policy support for SADC regional integration

3 Trade Blocs: 1960s 3

4 4 Export Shares: 1960s Europe +N America +Asia-UKAsia-USTotal Europe N America Asia-UK Asia-US

5 5 Shares of World Trade: 1960s Europe +N America +Asia-UKAsia-USTotal Europe N America Asia-UK Asia-US Total

6 Trade Blocs: 1970s 6

7 Trade Blocs: 1980s 7

8 Trade Blocs: 1990s 8

9 Export Shares: 1990s 9 EU+NAFTA+E&SE AsiaMercosurSACU+ROWTotal EU NAFTA E&SE Asia Mercosur SACU ROW

10 Shares of Global Trade: 1990s 10 EU+NAFTA+E&SE AsiaMercosurSACU+ROWTotal EU NAFTA E&SE Asia Mercosur SACU ROW Total

11 11 Composition of Trade Increased trade as share of GDP –Largest increase in trade among OECD countries Increased trade in intermediate inputs –Import content of exports increased –International segmentation of production Increased trade in new products Trends challenge standard trade theory and analysis of gains from trade

12 12 Intra-regional trade/GDP, 2002 Source: World Bank, Global Economic Prospects 2005, p. 43

13 13 Regional Trade Agreements RTA: a group of countries liberalize trade among themselves, but not with the rest of the world. Stages of regional integration agreements: –Preferential trade areas (PTA) –Free Trade Areas (FTA) –Customs Unions (CU) –Common Market –Monetary Union –Economic Union

14 14 Implications of Trends The formation of blocs pre-dated any explicit regional trade agreement (RTA) Three kinds of RTA: –Bloc creation: EU, NAFTA, Mercosur –Bloc expansion: EU expansion, CAFTA –Market access: EPAs, AGOA, FTAA, bilateral agreements

15 15 Shallow and Deep Integration Early RTAs and GATT/WTO rounds facilitated shallow (or negative) integration: –Reduction of border trade barriers New RTAs all involve elements of deep or positive integration –Policies and institution behind the border that facilitate increased trade

16 16 Regionalism: 1990s Dramatic increase in RTAs in the 1990s –NAFTA, Mercosur, SADC, ASEAN, CAFTA, FTAA, EPAs Characteristics of new RTAs: –Motivation to use regional integration as a means of insertion into the world economy Elements of deep integration –Agreements tend to be both South-South, and North-South

17 17 RTA formation Source: World Trade Organization

18 Gains From RTAs Many studies of actual and potential RTAs of various kinds –Virtually all benefit the members (trade creating) –Better if there is at least one large and/or rich country to anchor the RTA –Small countries gain proportionately more Bilateral agreements are less beneficial –Fallacy of composition: hub-spoke system is not good for the spokes 18

19 19 Productivity gains and market integration Integration in global value-chains –Fragmentation of production and scale economies Trade in intermediates and new products –Inter-firm and intra-firm coordination Quality and SPSS standards –High profitability from niche products Trade-productivity links –Technology transfer –Role of FDI in market integration

20 SADC: Regional Integration Is the SADC region forming a trade bloc? –Yes. Still early stage, with differing degrees of integration across the region Is South Africa large enough and linked enough to anchor the bloc? –Yes, given past decade of growth Is Mozambique ready for integration? –Yes, with supportive policies 20

21 21 GDP for SADC Countries

22 22 Sectoral Value Added

23 23 Shares of Intra-SADC Imports

24 24 Shares of Intra-SADC Exports

25 SADC FTA/Customs Union SADC FTA: much still to be negotiated SADC customs union or SACU expansion –Proceed in stages: E.g., first, include Mozambique, Malawi, and Zambia –Whether it is SADC or SACU depends as much on politics as on economics Elements of deep integration are required –Monetary union is much more remote 25

26 Southern Africa: Regional Organizations SADCC: Southern African Development Coordination Conference SADC: Southern African Development Community CBI:Cross-Border Initiative COMESA: Common Marker for Eastern and Southern Africa RIFF: Regional Integration Facility Forum for Eastern and Southern Africa SACU: Southern Africa Customs Union CMA: Common Monetary Area IOC: Indian Ocean Commission EAC: East African Community Plus AGOA (US), EPAs (EU), and South Africa/EU FTA 26

27 Membership in RTAs CountrySADCCSADCCBICOMESARIFFSACUCMAIOCEAC AngolaXXX BotswanaXXX DRCXX LesothoXXXX MadagascarXXXX MalawiXXXX MauritiusXXXXX MozambiqueXXX NamibiaXXX*X Seychelles*XXXX South AfricaXXX SwazilandXXXXXXX TanzaniaXXX*XX ZambiaXXXXX ZimbabweXXXXX 27

28 Policy Commitment Supportive policy environment is crucial –Reduce or eliminate policies that inhibit trade Tariffs, quantitative controls, distorting taxes –Institute polices and create institutions that facilitate trade, especially exports Standards/certification Infrastructure/investment Regional policy coordination Trade negotiations Business environment 28

29 Tax and Tariff System Supportive business environment requires a tax system that is: –Transparent –Predictable –Consistent –Uniform with minimal distortions Efficient administration is crucial –Responsive bureaucracy 29

30 Trade Negotiations RTA/Customs Union –Phasing: sensitive sectors –Rules of origin –Dispute resolution mechanisms Regional trade administration –SACU and/or SADC Capacity for continuing negotiations –Integration is an ongoing process 30

31 Trade Negotiations Negotiating institution needs to manage tradeoffs between competing interests –Industry/agriculture/labor ministries tend to favor existing industries, and hence to be protectionist –Need to reflect interests of potential exporters and public (e.g., consumers) Need for analytic support and organized advice from stakeholders 31

32 Coordination of Agreements Need to revise agreements as regional integration proceeds –E.g., EPAs and EU-South Africa agreements Regional institutions –Coordinate macro and monetary policy –Establish and enforce standards/norms –Dispute resolution and legal systems 32

33 Mozambique and Integration Problems and needs –Business environment issues –Need for infrastructure and finance –Regional institutions Government and private sector collaboration as process unfolds –Ready to start. Cannot learn to swim if you will not go into the water. 33

34 Success Indicators Process: –Establishment and evolution of regional institutions that facilitate trade –Tax/tariff policy reform and administration –Business environment Results –Increased trade and growth –Stable macro policy environment 34

35 35 Readings IDS Asian Drivers Team (2006). The Impact of Asian Drivers on the Developing World. IDS Bulletin, Vol. 37, No. 1 (January), pp Evans, David, Raphael Kaplinsky, and Sherman Robinson (2006). Deep and Shallow Integration in Asia: Towards a Holistic Account. IDS Bulletin, Vol. 37, No. 1 (January), pp Evans, D. et al. (2006). Assessing Regional Trade Agreements with Developing Countries: Shallow and Deep Integration, Trade, Productivity and Economic Performance. Report to DFID under DFID Project No , University of Sussex, April. Rodrik, Dani (1999) The New Global Economy and Developing Countries: Making Openness Work, Overseas Development Council, Washington. World Bank Global Economic Prospects, 2005: Trade, Regionalism, and Development. Washington: World Bank.

Download ppt "Mozambique and Regional Integration in Southern Africa Sherman Robinson Institute of Development Studies University of Sussex November 2007."

Similar presentations

Ads by Google