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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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Foreword

Regional economic cooperation and integration (RECI) has brought transformative change to the Asia-Pacific region. It has powered trade and economic growth, supported investment and competitiveness, and strengthened the ability of policymakers to overcome domestic challenges. Strengthening regional cooperation and integration offers great potential for the subregion to eliminate poverty and achieve inclusive and sustainable development. At the regional level, ESCAP member States have recognized the crucial importance of harnessing the potential of RECI to address these challenges. This was enshrined in 2012 through the Commission’s resolution 68/10 “Enhancing regional economic integration in Asia and the Pacific”. As we now work to meet the 2030 Agenda and its Sustainable Development Goals, it is right to take stock in order to assess the benefits further integration could deliver, and how this might be supported by ESCAP.

English

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