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Unlocking the Potential of Regional Economic Cooperation and Integration in South Asia

Potential, Challenges and The Way Forward

image of Unlocking the Potential of Regional Economic Cooperation and Integration in South Asia

In the wake of the adoption of the 2030 Agenda for Sustainable Development that commits all countries to pursue inclusive and sustainable development, regional economic cooperation and integration has gained new momentum in South Asia, as the broader Asian region is emerging as the new engine of global growth. Often referred to as the least integrated of Asian-Pacific sub-regions, South Asia’s intra-regional trade accounts for about 6 per cent of its total trade, in comparison with 26 per cent among South-East Asian countries. Despite its strategic location at the confluence of Central and South-East Asia, South Asia has also failed to harness the full potential of connectivity and economic integration with neighboring sub-regions. This report examines how countries in South Asia could capitalize on opportunities to cooperate for closer regional economic integration, in particular in the four broad areas of trade and market integration, regional connectivity, financial cooperation, and collective actions to address shared risks and vulnerabilities. It reveals that trade barriers, infrastructural deficits and political divergences have cost the sub-region direly in terms of lost opportunities for exports, in the amount of USD54 billion in 2014 for example. The report underscores the prospects available for South Asian countries to play a stronger role in broader regionalism in Asia-Pacific as well as discusses the unique role of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in facilitating that process.

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Addressing shared vulnerabilities

South Asia is a hotspot for natural disasters, with at least eight fatal earthquakes and cyclones hitting the subregion in the past two decades, killing hundreds of thousands of people while causing huge economic losses. The increased frequency and severity of natural disasters in the subregion call for regional cooperation to combat climate change, food security, and infrastructural devastation. Given the shared risks and vulnerabilities of the densely-populated eight nations, working together to reduce exposure is one of the only ways to sustain growth in the face of an increasingly volatile natural environment.

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