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.




Countries that have embraced an outward-oriented development strategy, with trade liberalisation at its heart, have not only outperformed inward-looking economies in terms of aggregate growth rates, but have also succeeded in lowering precipitously poverty rates and registering improvements in other social indicators. Accordingly, emerging and developing economies throughout the world have adopted commercial policy reforms that now underpin their economic development strategies. Competitiveness in global markets has never been more important for success. Yet, market failures and other binding constraints to trade – from infrastructural shortcomings to bureaucratic impediments – inhibit the ability of developing economies to exploit fully the benefits attendant in closer economic integration. Aid for trade has emerged as a cost-effective tool to overcome these binding constraints, strengthen recipient economies’ ability to maximise benefits from specialisation, plug into international markets, and move up value chains, while providing support to facilitate structural adjustment and ensure that the benefits from structural change are widely shared.


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