Regional integration and industrialisation : achieving regional economic resilience in the SADC

Abstract

Regional economic resilience in the Southern African Development Community (SADC) can potentially be fostered through the implementation of regional policy based on regional integration and industrialisation. The interface between intra-regional trade in an integrated regional market and processes of industrial production enhances the ability of the regional economy to continuously adapt to changes in global production value chains and ensure timeous adjustment to external demand volatility. Regional integration policy interventions include trade liberalisation initiatives and efficient spatial linkages to facilitate market integration. Regional industrial policy catalyses the development of supply linkages in an integrated market, enhancing regional competitiveness in global capital flows, while scale economies stimulate industrial productivity and technology spill-overs. Initiatives towards regional economic resilience are, however, negated by ineffective policy implementation instruments and institutions ill-equipped to drive processes of change in regional production development. This study evaluates the synergy of regional integration and industrialisation in fostering regional economic resilience through enhancing intra-regional trade and regional industrial production capabilities. Case studies of eight regional integration arrangements are investigated to determine the effect of intra-regional trade and industrial production on regional economic resilience during an external economic crisis, namely the 2008 Global Financial Crisis and subsequent recession. Results indicate that intra-regional trade and regional industrialisation accelerate a region’s pre-shock growth path recovery. Recommendations include the strengthening of intra-regional trade in the SADC through renewed economic integration initiatives and targeted interventions promoting regional infrastructure linkages, and capacitating regional institutions to develop strategic economic resilience policy interventions based on adjustment and adaptation.