Lagos:   A World Bank report has revealed that policies that facilitate geographic concentration and economic integration, both within and across countries as well as within the global economy, will promote long-term growth.  The new World Development Report 2009 with a theme 'Reshaping Economic Geography', released in Washington, United States of America (USA) stated that this is key in Africa, where accelerated growth is critical for poverty reduction in the years ahead.

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It also said that history has shown that severe crises can cause nations to become inward-looking, sometimes with negative consequences.  "Growth does not come to every place at once, with markets favoring some places over others. To encourage prosperity, governments should facilitate the geographic concentration of production, rather than fight it. But they must also institute policies that make the provision of basic needs- schools, security, streets, and sanitation - more universal", said Director of the report, Mr. Indermit Gill.

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The report noted that Sub-Saharan Africa today faces the triple challenges of low density or scarce and scattered populations; long distances between remote areas and centers of economic activity; and deep divisions in national, religious, and ethnic terms.  These dimensions of economic geography reduce connectedness between economic agents within the region, as well as with the rest of the world, the report stated.

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"In Sub-Saharan Africa, we can reduce the disadvantages of our poor economic geography through better urbanisation, more domestic specialisation, and more regional integration," said Chief economist of the World Bank's Africa Region, Shanta Devarajan.  "Regional cooperation, labor mobility, investments in trade, communication and transport infrastructure, and peace and stability need to remain high on our agenda, even as countries work to contain the spillover effects of the global financial crisis", the report said.

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It is commonly assumed that economic activities, within a country or region, must be spread geographically to benefit the poorest and most vulnerable. However, the WDR emphasised that trying to spread out economic activity can hinder growth and is not effective in fighting poverty. For rapid, shared growth, it noted that governments must promote economic integration which, at its core, is about the mobility of people, products, and ideas.

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"Contrary to what many believe, if urbanisation is done right, it can help development more in Africa than anywhere else," said Gill. "Living standards are much higher in Africa's cities than in rural areas, and so if this process is managed better, there could be great gains in productivity and poverty reduction."

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While investing in agriculture remains important, the report suggested that Africa must only sparingly use incentives intended to attract industry to lagging areas because this approach has not proven effective in other parts of the world.  It noted also that in Africa's lagging, landlocked countries, investments should be in people - education, health, and other social infrastructure- rather than in places; while in leading coastal countries, emphasis should be on physical infrastructure and better integration with global markets.

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The report suggested that Africa would benefit from 'Regional Economic Areas' that would bind together the economic interests of leading and lagging countries and provide a framework for providing regional public goods.

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Appropriately designed, such Regional Economic Areas would also facilitate continent-wide integration. Labor, capital, goods and services could then be helped to flow more smoothly within these areas, while access routes between landlocked countries and trade outlets are maintained and protected.

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Such a strategy would combine institutional cooperation, investment in regional infrastructure, and coordinated action among countries, the report said. In exchange, development partners could commit to increasing financial assistance for better living standards and development of human capital in lagging countries, as well as for growth-sustaining infrastructure, and to preferential access for African exports.

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"Action on this front is already under way. For example, in 2007, the U.K. allocated $1.4 billion over the coming decade to aid efforts by Burundi, Kenya, Rwanda, Tanzania, and Uganda to revitalise the East African Economic Community. All donors could be bolder in their approach," the report suggested.