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Economic growth

Strengthening Regional Trade for Sustainable Economic Growth

Strategic Insights

— 1 min read

South Asian countries can benefit significantly from regional economic integration by enhancing their bargaining power in international trade and making the region more attractive for foreign and local investors. However, the potential for intraregional trade in South Asia is estimated to be untapped, with only about 5% of the total potential trade realized, indicating a significant 67% of unrealized trade opportunities. This unrealized potential could benefit the region by approximately 3% of its GDP.

Key Takeaways:

  • Regional trade in South Asia accounts for only about 5% of the total potential trade, indicating a significant 67% of unrealized trade opportunities.
  • The potential for intraregional trade in South Asia is estimated to be two times its current level, which could benefit the region by approximately 3% of its GDP.
  • The primary barrier to increased regional trade is political issues, with around 40% of the world's poor residing in South Asia, making it the region with the second-highest poverty rate after Africa.
  • Political leadership must recognize the reality that economic development should not be sacrificed for political gain, as seen in the experiences of the EU and ASEAN.
  • South Asian countries can learn from the experiences of the European Union and Association of Southeast Asian Nations in implementing state-led government programs to promote strategic industries and sectors.

Statistics:

  • Regional trade in South Asia accounts for approximately 5% of the total potential trade, with a significant 67% of unrealized trade opportunities.
  • The potential for intraregional trade in South Asia is estimated to be two times its current level.
  • Approximately 3% of the South Asian region's GDP could be benefited by realizing the untapped potential for intraregional trade.
  • Around 40% of the world's poor reside in South Asia.
  • The South Asian region has the second-highest poverty rate globally, after Africa.

Sources:

  • Quote from Iftikhar Ali Malik, former president of the SAARC Chamber of Commerce and Industry.
  • European Union (EU)
  • Association of Southeast Asian Nations (ASEAN)
  • United States-Mexico-Canada Agreement (USMCA)

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