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Promoting Economic Cooperation in South Asia

Promoting Economic Cooperation in South Asia

February 16, 2010 - South Asia has attracted global attention because it has experienced rapid GDP growth since 1980, averaging nearly 6% per annum. Yet, it faces many challenges. There are two faces of South Asia. The first South Asia is dynamic, growing rapidly, highly urbanized, and is benefiting from global integration. The second South Asia is largely agricultural, land-locked, exhibits high poverty, suffers from many conflicts, and is lagging.

The divergence between the two faces of South Asia is on the rise. Many policy and institutional constraints contribute to this dichotomy. One important constraint is regional conflict that has made South Asia one of the least integrated regions of the world.

About the Report


The cost of weak regional cooperation tends to hurt the poor more than the other segment of the population. Two of the poorest South Asian countries are Afghanistan and Nepal; both are land locked. Several lagging regions in the larger South Asian countries of Bangladesh, India and Pakistan are located in the border areas and suffer from lack of market integration. Over 500 million people, most of them very poor, live in the Indus and the Ganges–Brahmaputra river basins.

These great basins are shared by six nations and are characterized by almost no cooperation and, instead, marked political sensitivity and tension. Several attempts to promote cooperation have failed. Climate change is predicted to have serious impacts on the monsoon, on river flows, and on the rising sea level, with increased incidence of floods and droughts in areas where current shocks already regularly and severely affect the lives and livelihoods of large numbers of people.

The report looks at the many policy and institutional constraints that contribute to the present state and have made South Asia one of the least integrated regions of the world.

Part I: The Imperative for Cooperation

Part I talks about the imperative for cooperation in terms of the development context of why cooperation is necessary for South Asia.

Part II: SAFTA and Beyond: Selected Cooperation Issues

Part II then looks in some depth at a number of specific areas of options and opportunities for cooperation, including trade, trade facilitation, transport, financial and food crises, migration, and tourism.

Part III: Private Sector Perspectives on Cooperation

Part III provides the private sector’s perspectives on regional cooperation based on contributions from business leaders of Bangladesh, India, Pakistan, and Sri Lanka.

Part IV: The Political Economy of Cooperation

Part IV deals with a number of political economy issues relating to distribution of gains from cooperation among participating countries and how to make South Asian Association for Regional Cooperation (SAARC) more effective in implementing agreed programs.


Last updated: 2010-02-16

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