Member's Area
Indian Ocean Rim Association
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Institutional Mechanisms

Study on Institutional Mechanisms for Promoting Intra-Regional Investment and Trade in IORA Member States

The Study was conducted by the Institute of Policy Studies (IPS) of Sri Lanka. The very nature by which the world economy has evolved over the past three decades has emphasized the increasing role of 'knowledge' as a primary source of wealth creation and as a tool for poverty alleviation. It has increasingly been recognized that 'knowledge' plays a decisive role in terms of determining a country's comparative advantage. Knowledge constitutes the main competitive advantage of industrialized economies. For economies that are in the process of industrializing, knowledge is viewed as a key apparatus through which they could catapult themselves into the ranks of the developed world

The study aims to explore the potential of economic cooperation in the Indian Ocean Rim Association (IORA) in knowledge-based industries and infrastructure development and to identify institutional mechanisms for facilitating the exploitation of this potential. Specific attention is paid to identification of opportunities for trade and investment cooperation in these strategic sectors. The study draws upon national and international sources of information on trade and investments of IORA Member States, while undertaking in-depth case studies for selected member economies based on different levels of performance in terms of the knowledge economy and infrastructure development.

In light of the growing recognition of the importance of moving towards Knowledge Based Economies (KBEs) and the strong link between KBEs and economic growth and development, cooperation in KBEs by fostering trade and investment linkages is an important area warranting renewed attention of IORA Member States. The following recommendations were made:

Creating a conducive business environment for trade and investment to take place is a key prerogative that needs to be undertaken by member economies of the region, specifically those that languish at the low end of the KBE spectrum.

  • In terms of building ICT infrastructure, the study recommends the liberalization of the investment regime in the form of tax breaks to companies engaged in developing ICT infrastructure. Building public-private partnerships geared towards mega ICT infrastructure projects is another important initiative in this regard.
  • Adopting policy frameworks to ensure the safeguarding and enforcement of an IP regime is central in spurring R&D among member economies to strengthen innovation systems.
  • The establishment of a common pool of funds to address the limited availability of venture capital, a data bank and other knowledge sharing mechanisms with subsidized access to scientific journals and technical articles for member countries are other important recommendations in light of supporting innovation systems in member economies.
  • Developing human resources, especially those with the skills and capabilities of knowledge-related activities is crucial in making the required transition to a KBE.
  • The sharing of knowledge of higher-end economies with other economies by way of building off-shore campuses, promoting distance learning and providing technical and monetary assistance to expand access to knowledge are key areas for potential cooperation, as identified in the study.


Institutional Mechanism