Regional integration could generate billions in South Asian trade

03 Apr '07

3 min read

South Asia's unprecedented growth, averaging close to 6 percent per year since the 1990s, has created a new momentum for closer regional integration, Praful Patel, World Bank Vice-President for the South Asia region, said at a media briefing in Washington.

Speaking ahead of the SAARC Summit in New Delhi on April 3-4, where India will take over the rotating chairmanship, Patel said there are clear signs that policymakers and the private sector in the region are pushing for closer integration. Regional cooperation, he said "can be a very effective tool in increasing trade, relieving energy shortages, improving connectivity, increasing investment, and promoting peace and stability."

According to a recent World Bank study South Asia: Growth and Regional Integration South Asia is the least integrated region in the world. Intraregional trade is less than 2 percent of GDP, compared to more than 20 percent for East Asia.

Annual trade between India and Pakistan, the bulk of which is routed through Dubai, is currently estimated at US$1 billion, but could be as great as US$9 billion. In addition, cross-border investments, and the flow of ideas, crudely measured by the cross-border movement of people or the number of telephone calls, are all low for South Asia.

Patel said: "Starting from such a low base, greater integration among South Asian countries could bring huge benefits to its people. Intra-regional trade in South Asia can increase to US$20 billion by 2010 if trade barriers are lifted. Benefits from energy trade can also be huge."

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