Regional Initiatives to Advance the Integration Process

Despite lagging trade logistics performance in the region, there have been considerable achievements toward an integrated regional agenda and improved connectivity. LAC has undergone a process of commercial and political integration that has encouraged physical integration initiatives to ensure the connectivity of infrastructure networks. In this sense, the most important regional initiatives have been the IIRSA and the Mesoamerica Project. The objective of both initiatives is to increase intra-regional trade through trade facilitation measures and to give priority to economic geography approaches and regional planning as a means of deepening integration at the regional level.

IIRSA, the largest of these initiatives, encompassed 514 infrastructure projects by the end of 2008, totaling 69 billion USD. It originated in 2000 with a view to advancing the physical integration of the South American continent. It is an institutional mechanism for intergovernmental coordination that incorporates novel methodological approaches, developing a strategic vision to align the regional portfolio of infrastructure projects through increased coordination and harmonization of standards in infrastructure and border crossing services as well as infrastructure investment. This is carried out through the identification of 10 strategic sub-regional corridors for cross-country infrastructure development.

Figure 9: IIRSA Corridors [ PDF 97.9KB | 1 page ]

These are complemented by key initiatives aimed at unleashing potential synergies from scale economies in transport and knowledge transfer while emphasizing monitoring and evaluation procedures to recover important lessons learned and improve future performance. As a result of these initiatives, IIRSA has identified key processes for integration that require normative harmonization, such as the regulation of transport and energy markets, ICT infrastructure, and border crossing management.

Importantly, the IIRSA-established financial structure has helped incorporate the private sector into transport investments with the backing of regional multilateral funding. The IDB, Andean Development Corporation, and the Fund for the Development of the River Plate Basin support more than 25% of the total investment (9.7 billion USD) required by 247 projects currently in progress or finished—about 70% of the entire portfolio. Furthermore, 46% of its financing capital is derived from the public sector, 35% from public-private partnerships (PPPs), and 19% from the private sector.

Figure 10: IIRSA Project Portfolio by Country [ PDF 33.4KB | 1 page ]

Figure 11: IIRSA Project Portfolio by Sector [ PDF 33.4KB | 1 page ]

Table 8: IIRSA Project Status and Financing Structure [ PDF 16.4KB | 1 page ]

Finally, IIRSA has deepened the development of methodologies for integration projects with increased economic assessments of transnational projects, strategic environmental assessments, productive and logistic integration, and development of digital maps and geographic information systems. Productive integration has been further developed by taking advantage of potential linkages between the removal of physical barriers and increased logistic and economic integration, extending the scale of production and markets, promoting competitiveness, and taking advantage of agglomeration economies. Furthermore, the development of logistic services is helping add value to IIRSA projects through knowledge transfer, capacity-building initiatives, and improved local and regional institutional performance and competitiveness.

In 2008, the Mesoamerica Project was born from the original Plan Puebla Panama (established in 2001) as an effort to integrate the Central American Corridor and Mexico through infrastructure and social projects. Currently the project includes nine countries¹⁴ from Mexico to Colombia, coordinating over 100 regional integration projects worth 8 billion USD. Importantly, the initiative seeks to move beyond the physical integration of participating countries and into areas of trade facilitation and increased investment in social services, such as health, education, and environmental protection. As a result of these efforts, strong synergies have become apparent in the integration projects, particularly in the smaller countries, where infrastructure has traditionally been a bottleneck. It has integrated other regional initiatives, such as the Central American Integration System, while attracting the multilateral participation of the IDB, the Central American Bank for Economic Integration, the Andean Development Corporation, and the Secretariat for Central American Economic Integration.

Figure 12: Mesoamerica Project Corridors [ PDF 101.5KB | 1 page ]

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