in october 2000, the twelve countries of south america launched, a multinational, multisectoral and multidisciplinary initiative, whose main objective is to develop the region's infrastructure within a context of environmental sustainability. supported by the inter-american development bank (idb), the andean development corporation, and the financial fund for the development of the river plate basin, the initiative is based on a hub strategy and its action plan calls for (1) strengthening national investment planning and coordination among countries, (2) standardizing and harmonizing regulatory and institutional aspects and (3) developing a portfolio of projects that encourage private sector participation and innovative financing schemes. this paper revisits iirsa's economic fundamentals, looking at: the motivation behind regional integration; the importance of transport versus policy related trade costs; and the likely impact of the initiative on regional disparities and growth.
