The Trade and Development Report 2007, subtitled "Regional cooperation for development", recommends that developing countries should strengthen regional cooperation with other developing countries, but proceed carefully with regard to North-South bilateral or regional preferential trade agreements. Such agreements may offer gains in terms of market access and higher foreign direct investment, but they can also limit national policy space, which can play an important role in the medium- and long-term growth of competitive industries. By contrast, strengthened regional cooperation among developing countries can help accelerate industrialization and structural change and ease integration into the global economy. However, to achieve this, trade liberalization is not enough; active regional cooperation should also extend to areas of policy that strengthen the potential for growth and structural change, including monetary and financial arrangements, large infrastructure and knowledge-generation projects, and industrial policies.

In its analysis of global economic prospects, the Report says the current global economic environment provides great opportunities for catch-up growth and meeting the Millennium Development Goals. However, the world economy is overshadowed by serious current-account imbalances, and by large speculative capital flows that distort exchange rates and perpetuate these imbalances. A safe correction of the imbalances would be much easier with more appropriate global exchange-rate arrangements, the Report argues. Exchange rates should be subject to the same kind of disciplines as tariffs and export subsidies. In the absence of such disciplines, however, regional monetary and financial cooperation among developing countries can fill some of the gaps in global economic governance.

FOREWORD

Explanatory notes

Abbreviations

List of regional blocs and membership

OVERVIEW

CURRENT ISSUES IN THE WORLD ECONOMY

A. Recent trends in the world economy

1. Global growth

2. Trade, commodity prices and terms of trade

B. Low real interest rates: global savings glut versus global monetary conditions

1. Widening global imbalances

2. Speculative flows induced by “carry trade”

3. Changing opportunities for speculation in emerging market economies

4. Speculative capital flows and real effects

5. National policies to prevent speculation

6. Globally coordinated policies to reduce global imbalances

Notes

References

Statistical annex to chapter I 

A. Introduction

B. The limitations of conventional thinking

1. Theoretical approaches to regional integration

2. The role of geography, history and politics

C. Regionalization and policy cooperation

1. Industrialization and the integration challenge

2. Bridging gaps and battling constraints

3. Global financial governance and regional cooperation

Notes

References

THE “NEW REGIONALISM” AND NORTH-SOUTH TRADE AGREEMENTS

A. Regionalism and the proliferation of free trade agreements

B. Issues relating to North-South free trade agreements, the WTO and policy space

1. Reciprocity

2. Market access for goods and government procurement

3. Liberalization of services

4. Investment and investor protection

5. Intellectual property rights

6. Competition policy

7. Conclusions

C. Assessing the development impact of North-South regional integration: the case of NAFTA

1. Introduction

2. Objectives and instruments of NAFTA

3. Expansion of intraregional trade and financial relations

4. Mexico’s economic and social performance after NAFTA

Notes

References

REGIONAL COOPERATION AND TRADE INTEGRATION AMONG DEVELOPING COUNTRIES

A. Forms of regional cooperation and effective trade integration

B. The relative importance of trade flows in regional integration among developing countries

1. Measures of regional trade integration

2. Latin America and the Caribbean 

3. Developing Asia

4. Africa

5. Commonwealth of Independent States (CIS)

C. Composition of intraregional trade

D. The potential role of South-South regional trade agreements

Notes

References

REGIONAL FINANCIAL AND MONETARY COOPERATION

A. Introduction

B. Regional cooperation for payment facilities and short-term financing

C. Regional cooperation for development financing

1. Regional development banks 

2. Regional bond markets

D. Exchange-rate mechanisms and monetary unions

1. Experiences in Africa

2. The case of the European Monetary Union 

E. Lessons for monetary cooperation

1. There is no alternative to regional cooperation

2. Regional macroeconomic policy is key for growth

F. Conclusion

Notes

References

Annexes to chapter V

Annex 1 The Southern African Development Community

Annex 2 The Gulf Cooperation Council

A. Trade logistics

1. Regional trade and its transport: a virtuous circle

2. Trade facilitation as an instrument to promote regional trade

3. Distance, shipping and the geography of trade

4. From landlocked to land-linked: potential gains from regional cooperation in trade and transport facilitation 

B. Large regional projects: examples from the energy sector

C. Regional industrial policy: issues and the European experience

D. Conclusions

Notes 

References