Bridging Integration Gaps: Scenarios and Policy Recommendations to Promote Physical Infrastructure and Reduce Intra-Regional Trade Costs

This policy brief is intended to serve as the basis for the discussion of the Ministers of Finance on action needed to promote physical infrastructure and reduce intra-regional trade costs, in the context of the Third Meeting of the Finance Ministers of the Americas and the Caribbean held in Lima (Perú), on May 28, 2010. It is argued that the Latin American and Caribbean region must bridge three interrelated policy gaps in order to advance its integration agenda. First, despite advances in trade liberalization, significant progress still must be made to perfect, harmonize, and bridge existing trade agreements. Second, the logistical costs related to the coverage and quality of physical infrastructure and lack of regulatory harmonization pose a serious constraint to regional integration and global competitiveness. Third, although cross-border strategic investments hold the potential to further advance the region¿s integration, their execution would be accelerated by overcoming certain institutional and operational obstacles.