Faculty / School

School of Economics and Social Sciences (SESS)

Department

Department of Economics

Centre

Center for Excellence in Islamic Finance (IBA-CEIF)

Was this content written or created while at IBA?

Yes

Document Type

Conference Paper

Publication Date

11-4-2023

Author Affiliation

  • Dr. Ishrat Husain is Chairman at Centre for Excellence in Islamic Finance.

Conference Name

South Asia Economic Summit XIV

Conference Location

Dhaka

Conference Dates

November 4- 5, 2023

First Page

1

Last Page

9

Keywords

South Asia, Population, Reducing poverty, Regional cooperation

Abstract / Description

Individual South Asian countries have made a lot of progress in raising the living standards of their population, reducing poverty , improving social indicators and integrating themselves into the world economy. However, the region as a whole has regressed from 1947 as far as regional economic cooperation is concerned. There are many reasons for this unfortunate development but the asymmetrical dominant power of India which forms 80 percent of the population and GDP of the region, lingering political tensions between India and Pakistan and Trust deficit among the countries are among the main contributory factors. Intra-regional trade has remained stagnant at less than 5 per cent of the total trade in the last 30 years. Studies have concluded that due to low transportation costs, cultural similarities which influence taste and cause profitable complementarities to emerge and low transaction costs, the economic benefits of liberalising trade between India and Pakistan outweigh costs. Despite this, the trade between the two neighboring countries has remained negligible. Regional trading arrangements have made a huge difference in North America, Europe and East Asia, but they have not, so far, been successful in South Asia. The attempts to revitalize SAARC and SAFTA will stimulate trade and growth as it unleashes competition' that lowers domestic prices, enables achieving economies of scale and acquiring new technology. Historically South Asia which was a unified market with strong transportation links connecting East to West until 1947 had one quarter of trade taking place within the region. It has dwindled to 6 percent as national boundaries have become barriers for trade flows and exchange of goods and services . Tariff and non tariff barriers have deprived the region from reaping the advantages of proximity, low transportation costs, cultural similarities which influence taste and cause profitable complementarities.

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