The Role of RCI in Achieving the SDGs in a Crisis-Prone World

Imed Drine

Lead Economist
Regional Cooperation & Integration Department, Islamic Development Bank 

Kadir Basboga

Senior Economist
Regional Cooperation & Integration Department, Islamic Development Bank 

30 June 2022   |  #22.13 |    The views expressed in this post are those of the author and may not reflect those of UNU-CRIS or the Islamic Development Bank. 

There is a growing recognition that regional cooperation and integration (RCI) is an indispensable policy tool to complement national efforts towards achieving the Sustainable Development Goals (SDGs). This tool helps countries reach a critical mass for partnership and network effects. RCI can support countries in facing the current global food and energy crisis as well as help reduce risks related to subsequent crises. This is particularly true in the case of the countries of the South, which do not have the same resources compared to the countries of the North, in addition to the limited ability of their economies to face crises.

Moreover, the complex nature of transboundary challenges in a crisis-prone world also reinforces the role of RCI in sustaining the momentum of SDG implementation. Many of the SDG targets are not only interrelated but also transnational by their nature. Transboundary challenges such as public health, food security, climate change, and energy security entail regional actions while cross-border infrastructure plays a key role in ensuring the continuity of trade flows to sustain development.

A Global Food System Crisis right after the COVID-19 Pandemic

The world is witnessing major shocks, one after another. The ongoing conflict between Russia and Ukraine is putting pressure on global food prices at a time when the world has not fully recovered from the COVID-19 crisis. The logistical challenges in the aftermath of COVID-19 are still quite significant. The adverse impact of shipment delays and soaring logistics costs is exacerbated by the fact that shipment of containers through northern Eurasian transport corridors are disrupted due to recent geopolitical developments in Eastern Europe. This is especially worrying for the poor in developing countries as these subsequent shocks are expected to disproportionately affect their livelihood and access to food. Therefore, there is a heightened interest in understanding how RCI could improve national and regional economic resilience.

Substantial evidence suggests that cooperation is a major determinant of economic resilience to make sure that the global progress towards the SDGs is not derailed or reversed. Experiences from the COVID-19 crisis proved that uncoordinated policy responses (e.g., border closures and unilateral travel bans) complicate the handling of challenges faced by people, and international cooperation is key to minimise damage during those times. In the post-COVID-19 world, geographical proximity is expected to play an increasing role in shaping global trade and investment trends, as production fragmentation is getting more concentrated among proximate trading partners, suggesting that RCI is becoming even more instrumental to boosting economic resilience.

When it comes to emerging food system crisis, transboundary nature of agrarian ecosystems also requires coordinated action for which RCI is well-positioned to maintain synergy between global and national level responses. Among other policy directions, regional trade liberalisation, operationalization of regional food reserves, addressing transboundary outbreaks of plant and livestock diseases, and management of natural resources need particular attention to enhance the resilience of food systems to stresses and shocks. It is also important to note that cultural and institutional similarities among neighbouring countries open many avenues for knowledge sharing and to learn from each other on how to improve resilience to crises. In this regard, South-South Cooperation, such as IsDB’s Reverse Linkage mechanism, is instrumental to facilitate the exchange of experience and expertise particularly in the Global South.

RCI in the SDGs Framework

RCI has long been a tool for boosting trade, promoting growth and sustainable development as well as improving livelihoods, and as such represents an opportunity for countries to recover from various crises and get back on track to achieve the SDGs. It also provides opportunities for lasting growth outcomes as well as for solving problems of collective interest to participating countries. Moreover, experiences show that when RCI develops successfully, the space for political fragmentation and tensions is significantly reduced.

Recognising the potential for economic transformation of countries through RCI, the SDGs explicitly refer to planning and cooperating at the regional level. Concretely, the SDGs and their associated targets include the promotion of regional economic integration and interconnectivity by developing regional and trans-border infrastructure to support economic development and human well-being (Target 9.1) as well as South-South and regional cooperation on access to science, technology, and innovation with a focus on knowledge sharing (Target 17.6). Therefore, both physical connectivity (hard infrastructure) and knowledge sharing (capacity building) aspects of RCI are equally covered in the SDGs policy framework.

The economic gains from intra-regional trade and investments can be translated into social gains at all levels of society including the disadvantaged. Likewise, enhanced cross-border transport, energy and ICT connectivity directly contributes to several goals including affordable and clean energy (Goal 7), decent work and economic growth (Goal 8) as well as industry, innovation, and infrastructure (Goal 9). The scope of RCI for the SDGs extends well beyond trade, investments and economic integration and includes joint actions to address development issues such as multidimensional poverty, inequalities, food insecurity, gaps in access to education, health, public services, and digital connectivity. As environmental problems and incidences of diseases and natural disasters do not respect the administrative boundaries of nation-states, RCI is indeed a must to come up with effective policies in addressing such vulnerabilities.

The Role of RCI in Supporting the SDGs Agenda

For multilateral development banks, RCI is an active area of interest to support the SDGs agenda. For example, IsDB’s RCI Policy brings together the above-mentioned priorities as it is built on four pillars, namely: (i) strengthening border connectivity, (ii) improving the investment climate and foreign direct investment, (iii) promoting Islamic trade and finance, and (iv) supporting regional public goods. Since these pillars are aiming at assisting member countries to achieve their development goals, the RCI Policy is considered as one of the central pieces of the IsDB’s overall policy framework to help them overcome development challenges and progress towards the SDGs.

In times of international crises and conflicts, RCI can also provide a lifeline to national economies. When insecurity and logistical difficulties in conflict-affected countries make it excessively costly to trade with far away countries (based on the assumption that trade costs grow as a function of increasing distance to destination markets in such a scenario), trade preferences often change in favor of immediate neighbors. This puts RCI at the forefront of external trade and economic development policy to keep up with the momentum of progress towards the SDGs. Though this is an example of necessity-driven economic integration (instead of opportunity-driven economic integration in an ideal case), it makes a strong case for considering RCI as an instrument to improve the resilience of national economies to external shocks. Findings from IsDB’s new Integration Index Report support this argument for conflict-affected countries. The full report is planned to be launched in the third quarter of 2022 for public dissemination.

Given the critical role of RCI in achieving the SDGs, some regional level initiatives have been launched to ensure coordination between national plans and the SDGs. The UNESCAP’s Regional Roadmap for Implementing the 2030 Agenda for Sustainable Development in Asia and the Pacific, and the Africa Regional Forum on Sustainable Development are few examples of such initiatives in the developing world. In this regard, there is a huge potential for regional cooperation organisations (RCOs) to assume a greater role in fostering regional dialogue and peer learning for the SDGs considering their strong convening power. To bridge any capacity gaps for the sake of reinforcing the role of RCOs as a follow-up platform for the SDGs, multilateral development banks can play a more substantial role by utilising South-South Cooperation modalities. This will enhance accessibility to knowledge, technology, and resources in an efficient way on the basis of solidarity and shared ownership.