Introduction
Broadly
speaking, regional economic integration implies the creation of the most desirable
structure of inter-regional economy through the formation of a customs union or
of a free, trade within the region and intentionally introducing all desirable
elements of coordination and unification.
Generally,
such an economic integration would have to pass through three distinct but
inter-dependent stages of cooperation, co-ordination and finally, of full
integration. In fact, economic integration may be identified with liberalization
of trade as well as factor movements. The harmonisation or coordination of
economic policies as a whole would follow once a common market has been set up.
The
progress of the cooperation and economic integration of the region has a big
potentiality for further industrial and economic development of the whole region
in general. Information Technology industries have big potentiality for the
future economic development of each country in the region. Information Technology
sectors stimulate high-tech and lead the technological innovations in the
economy and possibly lead the economic development of the region. The firms
have significant roles, as demonstrated by the experiences over the past three
decades. The effective transfer of its capability-building system, or its
significant human resources management and development system still has the key
importance.
Regional integration offers new and
increasing prospects for Africa’s scientific and technological development. If
well organized and used, integration could provide the basis for developing and
sharing infrastructure for research and development, and for mobilizing and using
scarce expertise and financial resources.
Science and technology consideration are being handled in the renewed
efforts to promote regional economic and trade integration in Africa, and
discusses new and emerging regional science and technology programmes.
By engaging in regionalism, particularly economic
integration, African countries wanted to overcome three major barriers
to development – the small size of their individual economies, their dependence
on imports of high-value or finished goods, and their dependence on exports of
a narrow range of low-value primary products, mainly natural resources[1].
MARKET CREATION OR EXPANSIONS’ ROLES FOR REGIONAL ECONOMIC INTEGRATION IN PROMOTING GROWTH AND SYSTEMIC COMPETITIVENESS OF THE REGIONAL AND NATIONAL ECONOMY
The question of Africa’s regional integration has
preoccupied many African leaders since the early years of independence. Many
have viewed it as a tool for promoting economic growth and sustainable
development and improving the living standards of the African people. The
overall strategic objective of regrouping African countries was to fight the
impact of colonialism and build a united Africa.
The formation of the OAU (Organisation of African
Unity), now the African Union (AU) was the first step towards promoting
continental unity. Since its inception, significant new efforts have been put
in place. Nevertheless, Africa has comparatively few success stories to tell
with respect to regional integration.
Recognizing
the importance of regional integration to developing a strong, united Africa,
the continent’s leaders have established a number of initiatives, the most
notable of which include the following:
n
A.
1. Scale effects:
n
Rationalization
of inefficient industries through reallocation of resources
n
Creation
of large markets allowing small firms to reach optimal size
n
Economies
of scale, reduction in average costs of production and lower consumer prices
n
A.2.
Variety Effects
n
Integrating
a country’s economy into a wider market allows consumers to choose from a
varied array of goods, which should increase their welfare.
n
Increased
competition across a wide range of products can also lower consumer prices.
n
From
a firm’s perspective, the opportunity to choose from a wider array of
production factors would enable it to use the most appropriate inputs, which
could increase its productivity.
n
B.
Accumulation effects: Investment and Trade
n
Greater
opportunities to specialize lower production costs, greater returns to factors
of production, greater returns to physical and non-physical factor
accumulation.
n
Technological spill-over resulting from regionalism
lead to increases in productivity and the reduction of production costs,
further attracting more investment, and hence, factor accumulation.
n
C. Location: The
formation of a trade bloc can have an influence on the location decisions of
foreign firms.
n
3 key location variables are (a) market size, (b) the
cost of production and the availability of relevant production factors, and (c)
market access.
n
Offering the
most segmented market in the world, Africa’s trade costs are much higher than
in any other region which has discouraged foreign investment while keeping
trade flows at very low levels. Market expansion through regional economic
integration can contribute to overcoming this constraint.
n
Regional economic integration: more efficiency, faster
accumulation, larger trade: a positive effect on economic growth.
n
Considering that higher efficiency and faster
accumulation are ingredients of a competitive system, regional integration
could be a stepping stone for Africa’s integration in the global economy.
RAPID TECHNOLOGICAL INNOVATIONS' ROLES FOR REGIONAL ECONOMIC INTEGRATION IN PROMOTING GROWTH AND SYSTEMIC COMPETITIVENESS OF THE REGIONAL AND NATION ECONOMY
Particularly,
in view of their national markets being rather narrow for the successful
operation of modern industrialization and implementation of technological
innovations, it is conceived as a regional market to enhance modern industrial
development and also to achieve economies of scale in the respective member-nations.
Institutions
and technological innovations drive global economic integration. In any era,
great powers seek to provide international stability in order to secure their
own interests and, by extension, encourage international trade. After World War
II, the U.S. and its allies explicitly sought to encourage global economic
integration through institutions like the International Monetary Fund. More
recently, technological advances like the Internet have reduced communication
and information barriers and fueled unprecedented levels of economic
integration[2].
Many
African leaders and the international community are increasingly recognizing
that science, technology and innovation are critical for the transformation of
economies, reduction of poverty, attainment of the Millennium Development Goals
(MDGs) and integration of the continent into the global knowledge economy[3]. To transform
their economies African countries should focus on measures that will improve their technological readiness, enlarge
technological capabilities to innovate, improve the quality of their institutions of knowledge (mainly
R&D and higher learning), and generally build stronger and dynamic national systems of innovation. They
should seize the grand opportunities to address the challenges outlined above.
This requires both political and administrative leadership from governments,
particularly the executive and legislative branches to champion the building of
systems of innovation and the promotion of technological innovation for poverty
reduction, economic growth and competitiveness[4].
Technology
Global economic integration also
relies upon travel, information and communication innovations. Air travel, for
instance, enables business and government representatives to move quickly from
one country to another in order to coordinate international economic activity.
Similarly, telephone and video communication have grown increasingly
widespread, inexpensive and reliable. Perhaps most importantly, computers and
the Internet allow access to global economic information, instantaneous
collaboration across space and simplified tools to move capital between states.
Taken together, these technologies allow for increasingly global economic
transactions and supply chains[5].
Regional cooperation in science, technology and innovation is also important for collective technological learning and peer influence among the countries. Countries with weak and underdeveloped systems of innovation are able to learn from those that have better developed systems. They can share information and experiences on what works better in terms of designing and implementing science, technology and innovation policies; how to better organize their R&D institutions; and other aspects of governing science, technology and innovation.
The integration of S&T considerations into
regional agreements is based on the recognition that their individual economies
are small and unable to marshal scientific and technological resources for
development. Many countries are poorly endowed with the human, physical and financial
resources necessary to develop and harness science and technology for economic change
and growth. Thus, as economists would contend, economies of scale dictate that
such countries pool their resources[6].
It is worth noting that the renewed interest in and
efforts to promote regionalism are taking place at a time of the globalization
of economic production and the associated rapid advances in technology.8
Regionalization
is being driven by advances in transport, information and communications
technologies (ICTs), as well as in policy and politics. This is evident in the
increasing transboundary movements of people, finance and products across the
region. Intraregional foreign direct investment flows are also increasing.
ENHANCED BARGAINING POWERS' ROLES FOR REGIONAL ECONOMIC INTEGRATION IN PROMOTING GROWTH AND SYSTEMIC COMPETITIVENESS OF THE REGIONAL AND NATIONAL ECONOMY
Enhanced bargaining power
By banding together through regional integration
arrangements, member countries can enhance their international economic
bargaining power, especially beneficial for small countries in trade
negotiations (Fernandez and Portes 1998; Schiff and Winters 1998; World Bank
2000b). But members must negotiate as a group—an approach not always taken
because of divergent national interests. A related goal of regional integration
arrangements is to raise the profile of members.
Using regional integration arrangements to enhance
bargaining power can have a serious drawback, however. Countries, particularly
small and low income ones, try to attract Foreign
direct investment (FDI) using a variety of
incentives, including tax concessions. If an arrangement gives a foreign firm
in one member country free access to the markets of all, members may compete
against each other using tax concessions, inducing a “race to the bottom “among
members as they compete to attract FDI. This outcome can be avoided only if regional
integration arrangements regulate such concessions.
Benefits of
Regional Economic Integration
Regional economic
communities are formed because of the expected benefits from
them. An important feature of the higher levels of integration is free trade
among members. Free trade is expected to lead to rapid
expansion of trade among members, which in turn is expected to
lead to rapid economic growth. These gains result from the dynamic effects of a
Community Unity, which have been shown to overshadow the static effects, viz.,
trade creation, trade diversion and terms of trade effect.
The dynamic effects,
which are cumulative in nature, lead to growth. Indeed, the dynamic effects of
a Community Unity are often described as the long-run consequences for the economic
growth of member
countries as a consequence of increased market size and
exploitation of economies of scale, increased competition, learning by doing,
and increased investment, Cooper and Massell (1965), Iyoha (1977) and Kreinin
(1964). Iyoha (1977) has shown that the larger the CU, the more likely it is to
lead to growth since the larger the CU, the larger will be the market created.
Also, the stronger the potential economies of scale are, and the more rapid the
autonomous productivity advances, the more likely will the CU lead to growth.
Thus, the contribution of a CU (or regional
integration in general) to economic
growth will be greater if the exploitation of scale economies, made
possible by increased market size, takes place with learning by doing.
Regional integration was a complex process; it
requires expertise for policy formulation and analysis; managing the process;
negotiating protocols and other regulations; understanding the process;
participating in the process as well as exploiting opportunities. Regional
Integration and Development (IRID) innovations will play a critical role of
producing young professionals and experts in regional integration.
CHALLENGES FOR REGIONAL ECONOMIC INTEGRATION IN PROMOTING GROWTH AND SYSTEMIC COMPETITIVENESS OF THE REGIONAL AND NATIONAL ECONOMY
The various African regional economic blocs, and
indeed the individual countries that comprise their membership, are at varying
stages of development and implementation of their regional arrangements.
The blocs’ scope covers various socio-economic, developmental
and political considerations, including the promotion of intra-regional trade,
socio-economic policy coordination, and management or development of shared
physical infrastructure and the environment. Some of the African regional
arrangements also cover issues of common interest in the areas of public
governance, defense and security, among other socio-economic and political
dimensions.
. Some African countries have only recently
rekindled their interest in economic integration, but for different reasons
from the initial decolonization agenda and the desire to overcome the
colonially imposed “artificial” boundaries. They have been inspired by the
success of integration efforts in Europe and the Americas. They also need
post-independence economic integration to gain bargaining power and survive
economically against the threat of marginalisation in the globalization
process.
The regional economic integration in promoting the
growth and systemic competitiveness of the regional and national economy will
face with many challenges known the social cultural factors, wars, lack of
unity and common interest among the countries, slow integration of the
technology, bad governance, corruption, limited access to infrastructures and lack
of political stability.
In order to overcome the Effective pooling of
resources and expertise to tackle cross-cutting regional challenges, such as
infrastructure, governance, gender, HIV/AIDS, peace, security and conflict
prevention, can help reduce the average costs of delivery, and also assist to
harmonise and raise standards.
Done on 03rd
May 2012
By Jean Paul
NTEZIRYAYO
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