Regional integration in Africa: Challenges and prospects

The small, sparsely populated, fragmented, and often isolated economies across Africa make a compelling case for these economies to integrate regionally to, reap efficiency gains, exploit economies of scale, and reduce the thickness of borders. But lack of complementarities among partners and diminishing returns to the exploitation of resources has reduced supply response to market-integration-oriented regional policies. African Regional Economic Communities (RECs) have pursued the “linear model” of integration with a stepwise integration of goods, labor, and capital markets, as well as eventual monetary and fiscal integration. Estimates reported here reveal the shortcomings of the linear model of integration, as behind-the-border measures aiming to reduce trade costs were largely ignored across African RECs until recently. While this is probably due to the difficulty in gaining the confidence necessary to get collection action started, many behind-the-border measures could still have been undertaken unilaterally.