Effects of infrastructure on regional income in the era of globalization: New evidence from South Asia

Abstract

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. At a time when the world is set to become virtually borderless in terms of