The Canadian, Mexican and U.S. governments will contribute $13 million to a regional infrastructure integration fund to be managed by the Inter-American Development Bank (IDB), supporting cross-border projects designed to reduce transport and logistics costs to expand trade.
In a recent study, the IDB estimated that Latin America and the Caribbean is at 50 percent of its intra-regional trade potential due to insufficient regional infrastructure and a still imperfect trade and regulatory architecture, suggesting that countries should prioritize integration projects to reduce trade costs, boost the region’s export capacity and promote a better distribution of the benefits of deeper integration.
President Barack Obama coined the fund the “Crossroads Fund”, recognizing the strategic location of Central America and the Caribbean as a point of encounter of the Americas. He announced a $5 million contribution to the fund last week during a visit to El Salvador, where he underscored the need to increase trade and economic growth across the region.
Using resources from this fund, the IDB will be able to provide countries in Latin America and the Caribbean with an incentive to invest in cross-border projects by lowering overall project costs.