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The Rise of Post-Hegemonic Regionalism pp 65–79Cite as

Cooperation for the Provision of Regional Public Goods: The Iirsa Case1

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Part of the book series: United Nations University Series on Regionalism ((UNSR,volume 4))

Abstract

IIRSA is key to understanding new consensuses, agendas and cooperation processes in the provision of infrastructure that ultimately shape a region, and the redefinition of the regional space as an arena for harmonization of public policies. The chapter looks at the nature and dynamics in place challenging conventional wisdom about the state and state regulations as hindrance for regional integration. The management and coordination of energy and infrastructure, it is argued, is an example of regionalization of public enterprises and an extension of public policies as a new motor of regionalism. The development of regional infrastructure is intertwined with new geopolitical goals and international relations reasserting control over key resources of political economy.

1This paper is an updated version of an article published in Integration and Trade, January-June 2008, Volume 12.

I wish to thank the editors of this volume for comments on a previous version of this chapter. I am also indebted to Mauro Marcondes, Roberto Iglesias, Alejandro Ramos for their careful reading and suggestions. Romina Gayá, research assistant for the IDB/INTAL, helped in information collection and data processing for this study. The opinions expressed herein are those of the author and do not necessarily reflect those of the IDB/INTAL or the institutions that are part of IIRSA. Any errors in this chapter are the sole responsibility of the author.

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Notes

  1. 1.

    Background information about IIRSA, mainly with regard to its institutional structure, spatial planning, and project selection, can be found on IIRSA’s website (http://www.iirsa.org). In addition, there are official documents from the countries and institutions forming part of the Technical Coordination Committee (TCC); see, for instance, IDB (2006) and IDB (2010). Of course, the other IIRSA-related articles in this issue also provide a useful frame of reference for analysis. Details and particulars about these aspects will not be commented upon here; for further information, refer to the cited sources.

  2. 2.

    Major objections to IIRSA so far have come from environmentalist groups concerned about the general impact of the proposal and, at times, from local actors that oppose some projects in particular. See Killeen (2007).

  3. 3.

    The Initiative had its origins in the South American Presidential Declaration made in Brasília, Brazil, in 2000. From then onward, IIRSA’s work and action plans are approved at ministerial meetings held annually. The bulk of the technical work is carried out at intergovernmental meetings attended by representatives from each country (national coordinators). For further information on IIRSA’s institutional structure, visit http://www.iirsa.org/acercadeiirsa_ENG.asp?CodIdioma=ENG

  4. 4.

    The Declarations of the South American Community of Nations in 2005 and 2006 have publicly acknowledged IIRSA’s accomplishments (http://www.cumbresudamericana.bo/armado.htm) during the early years. In 2010, UNASUR approved the creation of the Council of Infrastructure and Planning. IIRSA is a technical body that supports the Council.

  5. 5.

    See Easterley and Servén (2003), Lucioni (2004), and ECLAC (2004a).

  6. 6.

    South America ranks 83rd (out of a total of 124 positions) in the infrastructure pillar of the Global Competitiveness Index (GCI) compiled by the World Economic Forum (http://www.wef.org).

  7. 7.

    This term is used to refer to economic activities that (naturally) tend to the concentration in a single supplier: the whole market can be supplied, at minimum average prices, by a single production unit. Historically, the formation of public enterprises in the region can also be attributed to strategic considerations and, in general, to the characteristics of the State-led industrialization process.

  8. 8.

    Contractual forms are varied—management contracts, build–operate–transfer (BOT) arrangements, and so on—and are generally referred to as PPPs.

  9. 9.

    Strictly speaking, the above mentioned reduction in transportation costs explains why infrastructure has a positive impact on the rate of economic growth.

  10. 10.

    IIRSA’s definition of projects does not explicitly provide for investment in residential networks (for the distribution of either potable water or electrical power) directly intended for household consumption. From a practical point of view, this is a reasonable decision. However, this does not preclude that the development of the other modalities of infrastructure should be supplemented with this type of investments. A case in point would be transportation projects requiring investment in urban development for towns located in border areas.

  11. 11.

    Location models also take other factors into consideration: the magnitude and diversity (in terms of skills) of labor markets in the region, the potential for tapping geographically localized external economies (leading to clustering) as opposed to land rent, location diseconomies and congestion, which favor dispersion. See Krugman and Venables (1995).

  12. 12.

    For instance, this is one of the reasons why national and subnational legislations frequently provide for public consultation mechanisms prior to governmental approval of an investment.

  13. 13.

    Carcamo-Diaz and Goddard (2008).

  14. 14.

    Crafts and Venables (2001: 7–8).

  15. 15.

    For a detailed analysis of the Consensus Agenda, see IIRSA (2010a).

  16. 16.

    Thus, for instance, one of the topics to which IIRSA has allocated great resources has been the study of problems affecting border crossings and the critical factors influencing their efficiency. However, in spite of the technical efforts made by IIRSA, little progress has been made in the streamlining of border crossings and the consistent adoption of statutory regulations is far from being achieved.

  17. 17.

    There are records that the subject was under consideration at IIRSA’s initial meetings. See the Minutes of the Executive Steering Committee (CDE, in Spanish) entered in 2001 in Buenos Aires (http://www.iirsa.org).

  18. 18.

    Hemming and Ter-Minassian (2004) explain that the issues raised by several Latin American countries led the IMF to study the problem in more detail, both from the conceptual point of view and through case studies. Tanzi (2004), in a paper prepared for the IDB and also in relation to the case of integration projects, presents a series of arguments warning about the difficulties in allocating public budget to investment projects of complex execution and great scale. Both studies reveal how the debate on fiscal policy, its macroeconomic impacts, and its consequences on long-term growth was very intense in those years and was also linked to the concerns that countries experienced over the development of integration infrastructure. IIRSA was an important topic in the debate.

  19. 19.

    IMF (2005).

  20. 20.

    United Nations (2002) and ECLAC (2001). Rio Group (2004).

  21. 21.

    They also have a private window, with no sovereign guarantee, which in the case of IDB, for example, was originally designed in the 1990s to grant loans to the private sector. One of the purposes of this facility was to support the development of infrastructure arising from the concessions and privatizations carried out in the period.

  22. 22.

    As explained above, the formulae applied in the region have resorted to the formation of “binational agencies.” The requirement of sovereign guarantees, however, entails that multilateral loans be taken out by the agency’s member countries and invested in the agency itself. For public accounting purposes, this is a financial investment, covered by multilateral financing, which has an impact on the treasury and increases the fiscal deficit (if its effect on the national net worth is not taken into account).

  23. 23.

    The technical proposal, its economic rationale, and legal framework were analyzed at a meeting held by the Deputy Ministers of Economy and Finance of IIRSA’s member countries on October 27, 2004, in Lima, Peru. See Executive Technical Group on Financial Instruments (2004), op. cit.

  24. 24.

    Public spending was thus limited to the capital contribution (paid in) and the eventual granting of subsidies or special guarantees to the projects chosen by the country.

  25. 25.

    The EU has allocated € 347 billion to its Cohesion Policy for the 2007–2010 period, of which €282.8 billion are assigned to the objective of convergence of less-developed countries and regions.

  26. 26.

    IDB-INTAL (2011).

  27. 27.

    For a summary of IIRSA’s portfolio and projects see IIRSA (2010b). For a broader coverage of the initiative’s 10-year work program see IIRSA (2011).

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  1. Institute for the Integration of Latin America and the Caribbean of the Inter-American Development Bank (IDB/INTAL), Buenos Aires, Argentina

    Ricardo Carciofi

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  1. Ricardo Carciofi
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  1. , Politics & International Relations, University of Southampton, Highfield, Building 58, Southampton, SO17 1BJ, United Kingdom

    Pía Riggirozzi

  2. , Ciudad Autónoma de Buenos Aires, FLACSO/Argentina, Ayacucho 551 551, Buenos Aires, Argentina

    Diana Tussie

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Carciofi, R. (2012). Cooperation for the Provision of Regional Public Goods: The Iirsa Case1 . In: Riggirozzi, P., Tussie, D. (eds) The Rise of Post-Hegemonic Regionalism. United Nations University Series on Regionalism, vol 4. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2694-9_4

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