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What is the Regional Public Goods Initiative?

The Initiative for the Promotion of Regional Public Goods (RPG Initiative) is based on the rationale that the countries of Latin America and the Caribbean share both challenges and opportunities for development that can be addressed or seized upon more effectively and efficiently at a regional level through collective action and cooperation. The Initiative is also a response to the increasing importance of South-South cooperation (SSC) in the development agenda of most LAC countries and the IDB’s commitment to be an active partner in a South-South led learning and cooperation process.

The objective of the RPG Initiative is to support the generation of regional public goods (RPGs) that have a high potential development impact in the IDB’s borrowing member countries. The RPG Initiative finances non-reimbursable technical cooperation operations that have been identified and selected as a result of an annual call for proposals.

Since 2004, the RPG Initiative has financed 92 projects, investing a total of US$73 million in promoting RPGs. Here are some examples:

  •  Energy Efficiency

The Caribbean Hotel Energy Efficiency and Renewable Energy Action Program (CHENACT-AP) coordinates practices to increase energy efficiency and renewable energy generation in the Caribbean hotel sector. Reducing energy costs improves the competitiveness of Caribbean hotels, because energy costs are a significant portion of hotels’ operational costs and because the hotels can maket “green” tourism to environmentally aware customers. The CHENACT-AP will also allow participating countries to jointly apply for carbon emission reductions (CER) by selling greenhouse gas emission reductions in the carbon market. The transaction cost to prepare a CER project is high and not cost effective for a single hotel or even for the hotels of one Caribbean island. The solution is to bundle the potential CERs from a group of countries and submit them jointly to the carbon finance instrument that the United Nations Framework Convention for Climate Change (UNFCCC) has created to support the financial viability of small CER projects.

  • Health

The RPG project “Protocol for the Procurement and Quality Control of Pharmaceuticals” supports the countries of Central America, Belize and the Dominican Republic in negotiating and procuring certain pharmaceuticals as a group. The drugs included in the joint procurement scheme treat widespread and potentially fatal diseases, have a big economic impact, and/or are difficult to procure by each country alone. The drugs are principally dispensed in public hospitals and neighborhood clinics, benefitting the poorest segments of the population. The price negotiation and procurement of pharmaceuticals as a region has resulted in (i) lower prices and therefore savings for health ministries; (ii) a system of quality control to ensure that jointly procured drugs comply with regionally agreed standards; and (iii) new market opportunities for the countries’ pharmaceutical industry.

  • Investment

Since the early 1990s, the countries in Latin America and the Caribbean have concluded more than 500 international investment agreements (IIA). The unprecedented rise in IIAs has been paralleled by a growing number of investor-state disputes, which can have important economic, institutional and policy implications, especially for the smaller and less developed countries in the region. It was against this background that ten Latin American countries joint together to explore the possibility of creating a regional advisory facility to help them in cases of investor-state disputes. In 2011, this RPG project resulted in a draft for an international treaty to create a Regional Advisory Center for Investor-State Dispute Settlement. According to the draft treaty, the Center will provide member countries with services including the full-fledged defense of cases, advice for the management of cases, and training of defense teams in the countries’ line ministries.

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