Asia-Pacific Development Journal - Volume 12, Issue 1, 2006

On paper free trade and open economies maximize global efficiency in the production and distribution of both goods and services. However, in the real world where distortions are the norm the ideal of free trade is difficult, if not impossible, to achieve. In consequence, countries and economies have become increasingly involved in the pursuit of the “second-best” solution in the form of regional or subregional free trade arrangements. This paper examines the rationale for, and impact of, these arrangements in the ESCAP region and suggests that there is considerable potential for further trade cooperation between the various free trade arrangements formed in the different subregions of ESCAP. In this regard, the paper makes a number of recommendations that emphasize the need for the bigger economies of the region to take the lead in furthering trade liberalization.

The objective of this research paper is to present a suitable scheme of regional integration which can be applied between developing countries and less developed countries. This new scheme is called the Cooperation Effect Creation Scheme (CEC-Scheme). The CEC-Scheme demonstrates the basic conditions for regionalism to succeed in any form, whether open (free trade area) or closed (customs union), between developing countries and less developed countries. This paper proposes that implementation of the CEC-Scheme will facilitate the fulfilment of successful regionalism between developing and less developed countries.

The Asia-Pacific Economic Cooperation (APEC) has recently recognized the phenomenon of “financial exclusion” in its member economies, in consequence of a realization of the need to deal with the “losers” in the globalization process. With leadership from Mexico in 2002, APEC considered the merits of “microbanking” as a remedy for financial exclusion. With a number of member economies preferring to deal with financial exclusion as a “development” issue, rather than as a general condition in all APEC economies, APEC appears to have settled upon “microfinance”, rather than microbanking, as the solution to financial exclusion.

The South Asian Association for Regional Cooperation (SAARC), a combination of seven nations — Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka — in a diverse subcontinent of Asia, is going through the process of structural adjustment programmes. Without proper trading infrastructure, no country or economic bloc can succeed in the new borderless world where, for all practical purposes, regional cooperation has become an instrument for creating a competitive edge over other regional blocs. This paper tries to find out the role played by infrastructure facilities in economic development across South Asian countries over the past quarter century. The findings are statistically very significant to warrant major changes in future regional policies in order to remove rising regional disparities in both infrastructure and income. This also has a strong bearing on the success of poverty removal policies as the poor are regionally concentrated in such a diverse and heterogeneous region of the world, where market imperfections abound and heterogeneities are insurmountable.

A policy of trade liberalization is often suggested as a means of stimulating economic growth in developing countries. Given the potential benefits of trade liberalization policies, it is important to examine whether such policies are in fact in conflict with the environment as they accelerate economic growth.