Regional Perspectives on Aid for Trade

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Deepening economic integration via regional co-operation has emerged as a key priority in the reform strategies of most developing economies over the past decade. This is evidenced by the explosive growth in bilateral and regional trading agreements in which they now participate. Regional aid for trade can help developing countries spur regional economic integration, enhance competitiveness, and plug into regional production networks.

Based on a rich set of experiences regarding regional aid for trade projects and programmes, the study finds that regional aid for trade offers great potential as a catalyst for growth, development and poverty reduction. The study recommends greater emphasis on regional aid for trade as a means of improving regional economic integration and development prospects. While regional aid for trade faces many practical implementation challenges, experience has shown that associated problems are not insurmountable but do require thorough planning, careful project formulation, and prioritization on the part of policy makers.



Case study of Mesoamerica

This chapter explores and draws lessons from the effectiveness of aid for trade (AFT) in multi-country and regional projects in Mesoamerica for the period 2007-12. This is done by identifying and qualitatively analysing how close projects came to meeting their proposed goals. The results suggest that regional AFT initiatives have, for the most part, been effective. However, achievements can be enhanced via greater knowledge of the initiative among policy makers and other stakeholders. Co-ordination among agencies is satisfactory although there is room to improve efficiency when human capital constraints are binding in multi-country projects. There is no clear strategy to guarantee cross-country enforcement for regional projects that try to implement regional norms or standards. The initiative could co-ordinate projects to fully acquire the benefits beyond those of the individual project itself. In doing so, it can benefit from a number of externalities in terms of promoting trade and economic growth.


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