Developing economies and integration processes

The economic differences between North and South countries reflect for the last in a dual economy, given the internal divergences, many times inherited of the colonial past. This dual economy is characterised by the coexistence of more developed sectors with quite fragile others. Besides, most part of developing countries confronts high rates of persistent unemployment. Equally, these countries lack from essential factors of production: both capital and qualified work. Other macro-economic characteristic are: low development of the financial markets, driven by the public sector; the direct implication of the government in the economy and in the exchange rates; the high indexes of inflation; the use of debt and external help as common resources and the primacy of raw materials in GDP and exports.

The low degree of development of South countries has carried them to implement trade policies politics that try to alleviate the differences with the North, as the argument of infant industries, that are subsidised, custom’s protection and imports’ substitution. However, these facts have not prevented experiences of integration to arise very soon among developing economies. For instance, the most ancient Customs’ Union of the world (Southern Africa Customs’ Union, SACU) is in Africa. However, these experiences have not obtained any remarkable results, arriving many times to block and disappear, so much by obstacles purely economic as by factors of a more political kind; issues that would question the applicability of the model for this type of economies.

Customs protection is very high and a significant source of revenue for these countries. Moreover, transport costs are very important as infrastructures are very poor but from those that are intended to supply North markets. At the same time, post-colonial borders have land-locked many of these states. Therefore, the level of intra-regional trade is very low with slow growth rates.

Diverse obstacles are behind the deadlock or the disappearance of the processes of regional integration between southern countries. As a main economic obstacle, we may quote the disparities of development among the members of the agreement. These disparities can provoke that the profits of the integration (economies of scale, investment attractivity) benefit only he most developed. Thus, smallest countries can feel “betrayed”, especially if corrective measures have not been implemented. This way, agreements on profits’ distribution of the integration become difficult, before two opposed trends: most advanced members, that prefer to deepen the process of integration and less advanced members, that would rather go step by step, implementing equity measures.

As a political obstacle, we must take into account the importance of political  will in the processes of integration. In many cases these countries face unstable political regimes, with doubtful legitimacy, and whose decisions are voluble and very focused in short term. This goes in clear contradiction with the vision of a regional agreement, thought on a long-term basis, meaning a significant lack of commitment of some members and the failure to comply with terms and requirements, the veto in the decision organs, the overlapping of members between the diverse organisations and, last but not least, the unworkability of the agreement.

Given this background, it is then worth questioning which profits southern countries do expect to obtain when undertaking processes of regional integration. Nevertheless, the expectations are practically the same that in a process in the North: development and economic growth. In addition, this integration may involve the reduction of the dependency with regard to imports from the North. Besides, the extension of the market and the corresponding economies of scale are an incentive to increase the production capacity of these countries. The South has, equally, special interest in attracting the investment (and even the external help, that can focus in the same regional process) from a new prospective.

Many times marginalized in the international arena, developing countries search, through integration processes, for the enhancement of the negotiating position, obtained as a group. This stronger role is seen as a priority since northern economies have consolidated regional blocks.

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