(August 22, 2008) South Asia has moved from import substitution to more liberal trade policies and export promotion, and its international trade has grown very rapidly. The region, however, continues to have avery small share of global trade and exports still play a limited role in GDP.
Facts: - Intra-regional trade constitutes less than 5 percent of total trade. - South Asia's share of global trade is less than 2 percent. - International air freight is less than 1 percent of total trade volume. - Over a third of the South Asia’s exports consist of textiles and clothing. - The ports in the Bay of Bengal have low levels of productivity. - The South Asian logistics sector is at a formative stage but it is developing quickly.
This report provides a comprehensive regional audit of the present state of trade and transport facilitation in South Asia with regard to both inter-regional and intra-regional trade. The report assesses the broad trade-transport competitiveness of the region, especially in comparison with East Asia; identifies the major issues and constraints faced by each component of the trade-transport systems; and proposes agenda of potential changes to the systems which would enhance the region’s competitiveness.
This chapter provides a brief trade overview of continental South Asia (Afghanistan, Bangladesh, Bhutan, India, Nepal, and Pakistan). While South Asia has moved from inward to outward looking economic policies, international trade, as a proportion of GDP, is still well below the world average. The region represents about 1.2 percent of world exports and 1.7 percent of imports.
Chapter 3: Inter-Regional Trade: The Transport Sector
This chapter examines the performance of the basic building blocks of South Asia’s international transport chain - ports and shipping, highways and road transport, railways, and air transport Infrastructure and services are examined and the issues and possible improvements identified.
Chapter 4: Inter-Regional Trade: The Customs Sector
This chapter gives an overview of customs reform/streamlining that all governments in South Asia have embarked on. South Asia still performs relatively poorly with regard to the official (customs and other government agencies) regime in comparison with its chief competitors and OECD countries. However, the situation is improving and, in some important respects, South Asia seems to be catching up and even sometimes moving ahead of East Asia.
Chapter 5: Inter-Regional Trade: The Logistics Industry
Most international trade and domestic distribution in South Asia involves straightforward movements and consequently logistics is relatively simple and unsophisticated. This chapter describes that with the opening of the economies, the expansion in export-oriented manufacturing and the growing complexity of the domestic economies, the logistics needs are beginning to change, and the structure of the logistics industry is changing to meet these needs.
Trade within the region has increased rapidly in the last few years but its total level remains very small. This chapter notes that the economic importance to the countries is inversely related to their size – very important for the small economies but of minimal economic consequence for India, even though India accounts for some 60 percent of total intra-regional trade. While trade and transport facilitation for inter-regional trade has improved, little has changed with respect to intra-regional trade.
South Asia: Regional Cooperation and Integration The World Bank's strategy for South Asia is a region free of poverty. The efforts at the country level to reduce poverty can be complemented by regional cooperation and integration as an additional platform to unlock economic and social gains.