PW30-Jun-2015

Indicators to Measure Regional Integration in Africa

The number of regional integration initiatives has been steadily increasing. More than 350 Regional Trade Agreements (RTAs) are currently in force, and more than one-half of global trade is carried out under preferential terms. Regional agreements can make it possible to reap benefits from international integration, while tailoring the provisions of the agreements to the particular needs and adjustment capacities of the countries involved. Yet, how effective have the RTAs been in achieving their stated objectives? What have been the impacts of the regional preferences on ordinary citizens? To what extent have RTAs contributed to improved well-being and reduced poverty?

Peter Drucker

Answering these questions crucially hinges on the availability of high-quality data and indicators. Without these basic analytical tools, it becomes virtually impossible for policy-makers to monitor the effects of existing regional integration initiatives and assess the extent to which expectations have been met and whether policy adjustments might be warranted. Also, a strong set of results-based indicators can help to illuminate the costs and benefits of policy initiatives and, thus, inform the broader public dialogue on complementary reforms.

In Africa, there is widespread agreement that the implementation of existing integration initiatives has generally been lackluster, so that the economic development and poverty reduction potential from expanded intra-regional trade has remained untapped. The poor track record can be largely blamed on political economy factors and resource constraints. Political sensitivities, interest group pressure, and bureaucratic rigidity often contrive against policy change, while the expanding number of RTAs and their increasing policy scope put severe strains on the technical capacities of government administrations.

Implementation

More effective monitoring processes could help to raise the profile of the prevailing implementation deficits and provide policy makers and civil society with the necessary information to push for corrective action. Successful implementation of regional integration agreements requires two steps: first, the transposition of common commitments into national law, and second, the de-facto change of trading practices on the ground. In countries with notable governance challenges and under-resourced administrations, such as many African countries, the gap between the two implementation steps can be substantial, so that the de-facto implementation of trade reforms remains incomplete and ordinary traders, business people and consumers experience little, if any, benefits from regional integration.

Most existing integration monitoring systems in Africa are scorecard-based compliance assessments. These processes are useful in determining which member countries have transposed their regional-level reform commitments into national law, but are saying little about changes in trade practices on the ground. To obtain information on the impact of integration policies on ordinary traders, indicators of trade transaction costs are required. These can be indirect measures of trade volume changes or price differences, or direct estimates of the various trade cost components. The latter tend to be more specific and can more easily be related to changes in particular policy measures.

National statistical agencies have over long periods of time provided information that can be used to construct indicators across the main aspects of integration, but often only at a relatively high level of aggregation. In addition to this “traditional” information, new types of data that were previously not publicly accessible have become available over recent years. Examples include information from transport corridor monitoring committees, firm-level data from customs agencies, and information on local and regional prices of commodities from statistical bodies. These new data can potentially provide insights into the state of regional integration at a more disaggregated level and help to assess the impacts of specific trade policy measures.

Africa

In addition, new survey approaches that have proven their usefulness in generating high-quality information in other circumstances have been suggested as potential new sources of indicators to fill existing information gaps with respect to regional integration. One such approach uses mystery shoppers as prospective customers to inquire about the availability and pricing or products and services, who then report back on their experiences in a consistent and comparable way. Another technique uses crowdsourcing to gather information from large groups of people via mobile or internet-based devices to gauge the pricing and quality of different goods and services.

Integration monitoring should be comprehensive, such that it covers all the different dimensions of trade integration (merchandise trade, services trade, trade facilitation, factor movements), and effective, in the sense of making it possible to assess the extent to which regional policy reforms have lowered trade transactions costs and facilitated the cross-border operations of private sector firms. In Africa, these requirements of comprehensiveness and effectiveness can hardly be met with the currently available indicators from traditional data, so that the pursuit for high quality integration monitoring immediately suggests the need for major efforts by regional economic communities and the donor community to develop new indicators.

Many of the data necessary to construct more discerning trade outcome indicators are already available, while additional information that is missing might be relatively easy to generate. The scope of the indicator set and the selection of the particular range of indicators will be specific to each individual integration initiative and require some consultations and negotiation, but if policy makers and public officials are serious about addressing the implementation deficit, they need to devote more attention and resources to establishing the extent to which regional integration efforts are being reflected in trading practices.

Further Reading:

If you like it, just link it!" Tweet