ECLAC Proposes Eight Ways to Strengthen Regional Cooperation in a Post-crisis Scenario

The new world economic scenario emerging from the global crisis demands that Latin America and the Caribbean heighten regional cooperation initiatives to their full extent. This is the only way for the region to improve its participation in the global economy by being part of regional and subregional value chains and, strengthening their future competitiveness and growth, states the ECLAC document Spaces for Regional Convergence and Cooperation.

The publication was presented to the Heads of State and Government attending the first Summit for Latin American and Caribbean Unity held in Cancun, Mexico, on 22-23 February this year.

This Summit is a joint initiative of the Río Group and the Latin America and Caribbean Summit on Integration and Development. The latter held its first meeting in December 2008 in Costa do Sauípe, Brazil. In Cancun, the Heads of State and Government addressed issues of common interest in the region, such as climate change, the economic crisis, poverty reduction, drug trafficking and the reconstruction of Haiti.

The ECLAC document presented upon request of the Mexican government, which hosted the meeting, examines the main characteristics of the post-crisis world economic scenario and the need for greater regional cooperation. It also sets forth specific proposals to strengthen cooperation among countries in the region in eight priority areas.

Four of these are intraregional: fomenting trade within the region, developing infrastructure, strengthening social cohesion and reducing asymmetries. The other four are global challenges: innovation and competitiveness, a joint approach to the Asia-Pacific region, reforms to the international financial system and climate change.

With regard to fomenting trade within the region, ECLAC suggests a two-pronged programme that includes greater financing for trade and concerted measures for trade facilitation. In order to implement them, however, the region would need to increase its share of Aid for Trade, which was only 8% of total aid in 2007, while 42% was allocated to Asian countries and 37% to Africa.

Also important in this area are projects such as the Initiative for the Integration of the Regional Infrastructure of South America and the Mesoamerica Project, which involve several countries and clearly contribute to facilitating trade.

In terms of developing infrastructure, the document points to the need to preserve and encourage investment in infrastructure so as to gradually close the existing gap characteristic of the region and which poses a serious limitation to development. ECLAC suggests agreeing on a regional or subregional goal for investment in infrastructure - approximately 5% of GDP, considering the specific traits of each subregion or country- and creating a regional or subregional fund with resources from financial institutions, regional development banks and governments.

Social equality is also a central component of international competitiveness in the context of a knowledge-based economy, stresses ECLAC. The Commission proposes improving the quality of national social statistics, aiming at their harmonization and comparability in the region, promoting a regional definition of best practices in corporate social responsibility and evaluating the means to reduce the cost of remittance transfers, among others.

To reduce the asymmetries common in the region and in its subregions, the document suggests, among other things, strengthening the schemes of structural funds for relatively less developed countries, based on the positive experience of MERCOSUR’s Structural Convergence Fund and similar initiatives in the subregion.

To address these global challenges, ECLAC proposes increasing regional cooperation in innovation and competitiveness, which play a key role not only in the way a country or subregion participates in the global economy, but also in their own prospects for economic and social development. It is imperative to bring together national efforts and emphasize association.

Some steps set forth by ECLAC include establishing a regional forum for innovation, creating a regional cooperation fund for innovation to finance programmes or actions defined by the regional forum and promoting the creation and development of corporate regional foundations for innovation.

In addition, the region should make the most of the enormous possibilities in trade and investment offered by Asia, the most dynamic region in the world economy. Given the enormous dimension of Asian markets, taking full advantage of these opportunities is possible only through a concerted effort of association among countries in the region. Countries should strengthen their trade relations and productive complementation with Asia-Pacific and seek to participate in Asian chains of production and export.

ECLAC specifically proposes multi-national business and government missions to Asia to promote exports and investment project portfolios in infrastructure, energy, banking, tourism and logistics. High-level bi-regional political meetings can be held subsequently on the basis of a shared agenda.

As for reforming the international financial system, the Commission asserts that the region should make better use of the presence of Argentina, Brazil and Mexico in the G-20 to articulate common positions and defend them in this and other relevant forums. ECLAC also proposes strengthening regional financial institutions as a complementary defense to address the effects of future crises and prevent contagion.

Lastly, ECLAC believes that countries in the region need to address the challenges of climate change together. Latin America and the Caribbean has to arrive at a regional position in the negotiations underway in the context of the United Nations Framework Convention on Climate Change.

In addition, regional cooperation on adaptation and mitigation initiatives should be strengthened and extended. ECLAC’s proposals include creating an Observatory of Climate Change Policies to systematize the advances and the discussion on the issue and monitor public and private policies, develop methodologies and specific studies to assess the economic effects of climate change in different sectors and subregions, carry out programmes in support of developing renewable energies and energy efficiency in consumption, production and transportation and advance towards low-carbon economies.

*by International Trade and Integration Division