A new generation of policy reforms and investments in increased integration will generate exports and economic growth, according to the IDB
CALGARY, Canada - The impact and benefits of simultaneous investments in regional physical integration and regulatory reforms were the main topic discussed at the Fourth Meeting of the Hemisphere’s finance ministers on March 26, which took place on the side of the Annual Meeting of the Inter-American Development Bank (IDB).
The ministers’ meeting brought together 31 countries of the hemisphere, 29 of which were represented at the ministerial level. The meeting was also attended by senior officials of the IDB, the International Monetary Fund, the World Bank, the Economic Commission for Latin America and the Caribbean of the United Nations, and the Caribbean Development Bank.
At this annual event, the finance ministers of the Americas conduct a dialogue on issues of strategic importance to the region and the potential for economic integration and regional cooperation. The IDB, through its Integration and Trade Sector, coordinated the Technical Secretariat of the meeting, which was organized by the Ministry of Finance of Canada.
IDB President Luis Alberto Moreno in his speech underscored the region is in a favorable macroeconomic environment to take on the most relevant challenges for develpment in the medium term: increased productivity, based on improving the quality and relevance of education and increasing the ability to convert ideas into technological innovation; the productive use of revenues from natural resources and the expansion of the regional integration agenda.
The ministers discussed the strategic importance of integration in the wake of the financial crisis and benefits from investments in regional integration projects. Their discussions were guided by a policy document prepared by the IDB, the World Bank and ECLAC, in response to a request made at the Third Meeting held in Lima in 2010. At present, the region is realizing only 50 percent of its potential in intraregional trade. This is due in large part to the still imperfect commercial integration architecture (software) and insufficient regional infrastructure (hardware).
The key interventions for a policy and investment program aimed at deepening integration include the completion and convergence of trade agreements, reduction of rising costs generated by non-tariff barriers, trade facilitation and promotion of trade and investment, and the identification and implementation of investment projects in physical infrastructure to improve regional connectivity.
The ministers considered the economic payoffs and operational framework for investments in software and hardware integration. To reap significant returns from a new generation of integration policies and investments, an investment strategy is needed that utilizes complementary software and hardware as part of integrated regional action plans.
The role of the private sector will be critical for the success of this agenda. International financial institutions could support the region in this effort by providing funding for integration operations and the use of incentives for the development of integration programs, as well as through backing for regional strategic initiatives, policy dialogue, applied research, and capacity building.
The ministers also discussed the global and regional economic outlook and the policy challenges facing countries in view of the different growth dynamics in developed and emerging economies, as well as rising prices of raw materials.
The IDB, through its Integration and Trade Sector, which acted as the Technical Secretariat of the meeting, coordinated the drafting of the policy document and provided technical support.