Integration In South Asia Research Articles

SAARC for Geopolitical Symbolism

Unlike its other counterparts, South Asian Association for Regional Cooperation (SAARC) as the first of its kind experiment at regional integration in South Asia has almost reached a point of stagnation. The idea that was flagged off in 1985 has not delivered significant returns either as a forum to enhance intra-regional trade or as an institutional platform for conflict management and dialogue. This article argues that the SAARC as an idea has not been seen more than a geopolitical symbol of regional cooperation in South Asia. As global power pivots towards Asia, a stable and integrated South Asia could well be a game changer. However, the regional organisation has not been able to embody the spirit of multilateralism and remains on the sidelines, marred by long-standing bilateral issues. States in South Asia are either looking beyond the region or investing in subregional initiatives to further their interests.

THE APPLICABILITY OF ADOPTING EUROPEAN UNION’S INTEGRATION MODEL IN SOUTH ASIA: A COMPARATIVE ANALYSIS OF EUROPEAN UNION AND SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION

The European integration is three decades older than the South Asian integration. European Union stands as an outstanding regional body even though South Asian Association for regional Cooperation is still struggling to achieve the basic premises of economic integration. The aim of this paper is to comparatively analyze the two regional integrations and to identify how far is it appropriate to adopt the European integration model to accelerate the South Asian integration. One specific objective is to identify the core differences between the two regional settings and next objective is to determine the theoretical relevance of certain existing theories in describing the two integration processes. Another specific objective is to evaluate the suitability of adopting European Union model in South Asia and to recommend necessary reforms for better integration in South Asia.Data triangulation method has been used to accumulate secondary data from multiple sources available in electronic and printed form including books, journals, web, reports, historical records and treaties. Qualitative content analysis has been used since this is a documentary analysis and Content analysis evaluate document texts and to test theoretical relevance to understand data more comprehensively and scientifically. It will test prevailing theories in different contexts when compare the categories of different settings. Key findings depicts that there is a sharp diversity between the European Union and South Asia in terms of trade, economic development, human development, industrialization, urbanization, trade liberalization, income levels, poverty alleviation and political integration. Amidst these differences the applicability of adopting the European model proves to be a failure due to many factors. The democratic nature of the countries and their practice of free market economic policies along with the successful resolutions for political tensions in Europe significantly caused the long term success of European integration whereas South Asian countries are suffering from huge diversities in economic, geographic, cultural, trade and military terms within the region and hesitate to co-operate with one another due to these differences. Indo-Pakistan political tensions blended with smaller states? fear psychosis of Indian hegemony is the greatest constraint for better integration in South Asia. South Asia required rearranging the structure of its regional organization and opening avenues to discuss contentious issues among member states. Establishment of real democracies and reliable interactions among people to people contacts while adopting more comprehensive free market economic policies domestically would facilitate the economic and political integration of South Asia in the future.

The Bottom-Up Approach to Regional Integration in South Asia

The Bottom-Up Approach to Regional Integration in South Asia

Book Review: Amita Batra, Regional Economic Integration in South Asia: Trapped in Conflict?

Amita Batra, Regional Economic Integration in South Asia: Trapped in Conflict? New York: Routledge, 2013, pp. 200, $145.00.

Challenges to Regional Services Integration in South Asia

Regional integration in services in South Asia holds considerable potential across many services. This article highlights the scope for and potential benefits from regional integration of services in this region and the many sectoral as well as cross-cutting challenges to this process. The article argues that there are regulatory, infrastructural, institutional and business environment related constraints in the SAARC member countries, which impede regional services integration. There are also political economy challenges which prevent progress on critical cross-cutting issues such as intraregional mobility of service providers and investment. The article argues for a broad-based, flexible regional services agreement, which takes a progressive approach to services integration alongside regional efforts to address issues of investment, regulatory harmonization, labour mobility and connectivity, national efforts to address issues of regulatory, institutional, infrastructural and human resource capacity and a favourable policy orientation and mindset at the individual country level.

Regional Integration and the Post-2015 Framework

Being universal and at the same time necessitating country-level plans and policies, the post-2015 framework is expected to create opportunities and face challenges related to implementation. This article explores the potential for regional integration in South Asia to implement the post-2015 framework. The article presents an overview of progress on the Millennium Development Goals (MDGs), which highlight areas of weaknesses for South Asian countries and a comparison of the proposed Sustainable Development Goals (SDGs) and South Asian Association for Regional Cooperation (SAARC) Development Goals to identify the gaps that South Asia may experience. This is followed up with a discussion on regional means of implementation that may improve prospects of successful implementation of the post-2015 framework. The article finds that incentivizing regional integration could help generate sustainable development outcomes if contextual factors and evidence-based policies that address political, economic and historical barriers are meaningfully considered.

South Asian Regional Integration – Challenges and Prospects

AbstractSouth Asian regional integration is seemingly confronting many challenges. The aim of this paper is to identify those challenges and also look for prospects. Although regional integration in South Asia has adopted a kind of institutionalization, it is yet to deliver any concrete outcomes. High-politics and the not-so-conducive regional economic structures hinder any effectual culmination. However, constructivism, as a theory, is given due credence in this paper when looking for future prospects. The paper highlights the issues, and attempts to offer certain policy directions by analyzing the challenges and identifying the prospects in the on-going integration/cooperation process.

Intra-regional FDI and Economic Integration in South Asia

This article examines trends and patterns of intra-regional foreign direct investment (FDI) in South Asia, with a focus on the potential for integrating production processes among countries in the region through further trade and investment policy reforms. The empirical evidence pieced together from scattered sources suggests that horizontal (market seeking) FDI has continued to dominate South Asian intra-regional FDI, with a significant shift in recent years in favour of services sector activities. Vertical (efficiency seeking) FDI in the region has remained confined to a few product lines, predominately garments, and also a few industries in which the availability of specific natural resources plays an important role in the site selection decisions of firms. In other industries, including electronics and electrical goods in which global production sharing is heavily concentrated, there is no evidence of notable cross-border operations by regional firms.

Process of Cooperation and Integration in South Asia: Issues in Trade and Transport Facilitation

Recent economic progress of South Asian countries has been impressive. As per Asian Development Bank (ADB, 2011), macroeconomic fundamentals of the region have been strong as it has continued to experience an economic growth of more than 6 percent per year during the period 2008-10. The report had also forecasted the level of economic growth at more than 7 percent during 2011-12. Except for Nepal and Pakistan, which experienced a modest growth, individually, all the SAARC countries, including the underdeveloped economies like Afghanistan, Bangladesh, Bhutan, and Maldives have shown similar level of economic progress during 2010 with more than 6 percent rate of growth (Table 1). South Asia is thus deemed to be the second best performing region after East Asia.

South Asian Association for Regional Cooperation (SAARC): Its Role, Hurdles and Prospects

In the face of increasing importance of regionalism, SAARC stands unavoidable and significant organization in South Asia. Since its formation in 1985, it has played an important role by bringing the membercountries closer together by holding various meetings and summits at various levels. Though overall development of this organization is marred by internal disputes and various other factors but still its establishment and the sense to develop regional integration has created a hope for its future progress. This research paper analyzes the role of SAARC. A critical evaluation has also been made of why SAARC has not been able to develop at par with other developed organizations like European Union (EU). The potential areas of cooperation have been pointed out and suggestions have been put forwarded for removing the existent hurdles and to move the wheel of integration in South Asia more fastly for improving the conditions of poor people in this region.

Stock Market Integration in South Asia

While the topic of stock market integration has been one of the highly researched area in the literature but focus had mostly been on the stock markets of developed economies. Few have focused on analyzing market integration in South Asian region and no inclusion of Bhutanese stock has been found in the literature in any of the earlier studies. The objective of this paper is to analyze market integration between Bhutanese, Indian and other indices in the region. We also analyzed whether other indices in the region are co-integrated with Indian stock market, as Indian market is more proficient in the region and can be believed to have influences on others. We analyzed all indices in the region on one to one basis (using pairwise co-integration test). We used weekly data from January 2006 to December 2011 period from the stock exchanges of (Bhutan, India, Nepal, Bangladesh, and Pakistan). Applying, Dickey-Fuller method, we tested unit root for each stock indices and used Johansen co-integration approach pairwise to test the long-term relationship between stock indices and multivariate approach to test market integration as a whole. We found that all indices are stationary at I(1) and confirmed no long-term relationship between Bhutanese stock with Indian and other regional stock markets. In fact we find no market integration either on one to one basis or for the south Asian market as a whole. Information on market integration should help market players in managing their investments in capital markets in a sustainable manner.

The Impact of Recent Financial Crisis on Economic Growth and Youth Employment in South Asia

This paper investigates the impact, as well as the channels of transmission, of recent financial crisis on economic growth and youth employment in three major South Asian countries: India, Pakistan and Bangladesh that together represent more than 97 percent of the population and 96 percent of the total GDP of South Asian region. The employment concerns are of particular significance in the region since they determine the contours of poverty and human development in the region and within employment, it is youth employment that deserves special attention due to the 'youth bulge' present in the current demographic structure of each South Asian country. The study constructs a comprehensive index of financial stress using data from 1972 to 2009 and conducts panel data estimation techniques to study the effect of financial and trade related stress on economic growth in the region. Using the long term relationship between growth and employment, the study estimates the precise impact of recent slowdown in economic growth - resulting precisely from trade and financial stress - on total as well as youth employment in the three countries. The results of the study indicate that as result of financial crisis, around 12 million people are estimated to have lost their employment in the region as a whole, out of which 2.35 million consist of youth between the ages of 15-24. The study also finds that most of this effect has occurred via trade channel rather than the financial channel. This makes intuitive sense as the level of international financial integration in South Asia is much lower than the trade integration.

Financial market integration and co-movements among the growth rates: Evidence from South Asian countries

Since the 1980s, South Asian countries have been implementing financial market deregulation policies continuously. Although the process of deregulations has been slow, many countries in the region are heading toward a more integrated market despite current global turmoil. Financial market integration in South Asia could have synchronised economic activities of the countries in the region due to the impact of consolidation. This suggests that when the region’s economies grow/contract, all countries could follow the same path demonstrating a co-movement of growth rates among countries. When economic growth rates are similar for a region, it may be easier to formulate economic policies to achieve a common goal. As the political leadership of South Asia has agreed to work towards forming an economic block similar to that of the European Union and ASIAN, examining co-movement of growth rates could shed more lights on the issue of the success of market integration in the region. The objective of this study is to study market integration by analysing financial markets, trade and economic growth data to spot whether there is any co-movement of growth rates among South Asian countries due to financial market deregulation policies implemented so far. As findings show mix results, we used region’s governance indicators to examine further and found that weak governance is a serious problem in the South Asian region.

Regional Integration in South Asia: An Analysis of Trade Flows Using the Gravity Model

The study deals with trade benefits from the free trade agreement of the SAARC countries. It assesses the trade potential and trade creation with member and non-member countries. The gravity model has been used to measure the bilateral trade flows and to assess the trade effect for member and non-member countries. Two analyses estimate the gravity model. The first analysis is based on crosssectional data to capture the trade effect individually each year; and the second analysisutilises the pooled data to measure the overall trade effects and trade flows for the period 2003 to 2008. The results from the two approaches show that estimated coefficients are consistent with the model assumptions. Both analyses show that the regional trade agreement of the SAARC countries could divert the trade for member countries as well as for the non-member countries. However, trade volume will increase only if the major partners (Pakistan, India, and Sri Lanka) sign regional trade agreements. JEL classification: F15 Keywords: Trade; Regional Integration; Gravity Model

The Political Economy of Trade Integration in South Asia: The Role of India

The South Asian regional trade integration process to date has generated only limited enthusiasm. It suffers from significant shortcomings, primarily on account of a very cautious approach adopted to achieve the ultimate objective of ‘free trade’ within the region. In turn, this has led to a fragmentation of the integration process, with some of the partners of the South Asian Association for Regional Cooperation (SAARC) bloc opting for a speedier and more liberal bilateral process with India. India’s engagement remains the critical feature as the single most important trading partner for almost all the other South Asian countries. However, the dynamics of Indian economic integration initiatives too have been changing rapidly, whereby it is looking increasingly to strengthen its economic relations with the wider Asian region. In this context, the question of India’s willingness to give leadership to carry the rest of South Asia as the bridge that connects the region to East Asia needs to be examined. The current evidence suggests that India has attempted to do so via a host of bilateral and regional arrangements, but that the divergences in strategic interests amongst SAARC countries has left Pakistan on the margins of an evolving scheme of overlapping trade initiatives in South Asia. Thus, while something approximating ‘free trade’ in South Asia appears to be taking shape, it is unlikely to take the form of an inclusive South Asian regional integration process envisaged by SAARC.

Need for Economic Integration of South Asia

Though South Asia covers 4,488,300 sq kms of the world's surface area with a population of 1.5 billion, still it has only a negligible share of the world's total volume of trade. Most of the people of this region are living below the poverty line. Only mutual initiatives towards economic integration can play a vital role in upgrading the standards of living of the poor people.Economic integration in general is a process of removing progressively the discriminations which occur at the national borders. Such discrimination may affect the flow of goods and services and the movement of factors of production either directly or through economic activity via the factor of production. Academicians have predicted two opposite outcomes, both positive and negative. Negative effects include the possibility that the infant industrial sector may not survive the open market competition or that the sick industries might face ruin. On the other hand, positive effects in the short-run include inland 'trade-creation effects.' But that must outweigh trade diversion effects in order to achieve beneficial trade liberalization. However, apart from short-run benefits, there are also the long-run benefits such as greater technical efficiency due to greater competition, larger markets, higher consumer surpluses, and more foreign investments. There are five main stages of regional integration such as free trade areas, customs unions, common market, economic union and total economic integration. Such stages are the outcome of policy decisions taken by regional inter-governmental forum and/or supranational institutions in order to affect the depth and breadth of regional integration.

Prospects and Problems in Promoting Tourism in South Asia

South Asia possesses many valuable tourist resources and attractions, which could be important vehicles for reducing the widespread persistent poverty in South Asia. However, the potential of tourism has remained largely unrealized for several reasons. Recently, several organizations, including the South Asian Association for Regional Cooperation (SAARC), have focused on promoting intra-regional tourism by utilizing common resources, shared culture and common physical infrastructures. This article examines the progress made in promoting tourism in South Asia and explores the factors that facilitate and constrain the promotion of tourism in South Asia. The analyses show that despite several initiatives, tourism's contribution to regional national economies, in terms of employment generation, foreign exchange earnings and national revenue, has remained minimal. Complicated travel procedures, inadequate infrastructure and transport facilities and the poor quality of management and service, together with a negative image arising from safety and security concerns, have constrained intra-regional tourism. This article argues that inadequate political commitment and bureaucratic meandering are the primary obstacles in promoting tourism and economic integration in South Asia. Recommendations for removing the physical and institutional barriers to intra-regional tourism are outlined.

South Asia's Integration with the Rest of Asia: a survey

While there can be unforeseen difficulties, developments of the recent past point to the gradual integration of South Asia with the dynamic economies of East and Southeast Asia. Two modes of integration have been taking place: the expansion of existing subregional free trade agreements and ASEAN's initiatives as a bridge between the regional groups of Asian economies. While the present endeavours of these economies are resulting in a shallow form of integration—which may not suddenly turn towards deep integration—onward movement along the same path is certainly possible.

Rejuvenating SAARC: The Strategic Payoffs for India

The South Asian Association for Regional Cooperation, SAARC, founded in 1985, has floundered since its inception due to the lack of a strong political will. This article evaluates the political-economic and strategic benefits of deeper integration in South Asia from the Indian perspective. The abysmally low level of integration witnessed so far in the region has been driven by a myriad of constraints that restrict economic interaction among the South Asian countries. Gains from regional integration can emerge only after these constraints are effectively addressed. The central argument of the article is that recent global developments and increasing openness of SAARC economies are moving the principal drivers of this process towards a more supportive stance for SAARC and this creates a new window of opportunity. This opportunity must be seized by India as it has taken on the chairmanship of the organization, because a successful SAARC directly contributes to India's strategic objectives both in the region and also globally. In this context the article discusses ten reasons for India to rejuvenate integration efforts and revive regional cooperation in South Asia.

The Twelfth SAARC Summit

The adoption of the Framework Agreement on South Asian Free Trade Area (SAFTA) at the Islamabad SAARC Summit imparted a major thrust to the movement for regional integration in South Asia. Advantages of an FTA are derived not only from the enlargement of the market and enhanced investment flows but also from measures of deeper integration included in FTAs. These measures include trade facilitation, investment, services, joint development of infrastructure, monetary and financial cooperation, cooperation in science and technology, harmonisation of macro-economic policies, structural changes in production patterns and common strategy for negotiating in international fora and with other regional groupings. The article summarises the measures of deeper integration provided in regional groupings of developing countries. It gives a rough sequencing of such measures along the path of regional integration. Finally, it analyses the scope, significance and prospects of deeper integration in South Asia in selected areas.