Unlocking the Potential of Regional Economic Cooperation and Integration in South Asia: Potential, Challenges and the Way Forward

Report12 May 2017

At a modest 6% of total trade, intraregional trade in South Asia stands at less than one third of its full potential. Trade barriers, inadequate infrastructure and a lack of political commitment to finding common solutions to support cross-border commercial activity have cost South Asia over US $54 billion per year in lost export opportunities. With 309 million people living on less than $1.90 a day – the largest concentration of poverty in the world – South Asia should urgently pursue broad-based regional economic cooperation that could enable far more effective responses to the subregion’s developmental challenges.

Unlocking the Potential of Regional Economic Cooperation and Integration in South Asia examines the state of economic integration in South Asia and identifies potential areas for further strengthening subregional linkages. Focusing on the four pillars of ESCAP strategy to deepen regional cooperation and integration, the publication provides recommendations
on policy actions urgently needed to increase market integration, improve connectivity, boost investment in infrastructure development and tackle shared vulnerabilities and risks. It calls for the consolidation and upgrading of existing trade and investment cooperation initiatives into a South Asia Comprehensive Economic Partnership (SACEP).

The publication also highlights the need for South Asia to integrate more closely with the Asia-Pacific economy and build greater synergies in the broader Eurasian economic space. Toward this, the three overlapping subregional organizations of SAARC, ECO and BIMSTEC could create an institutional arrangement to exploit synergies and network externalities, creating an arc of advantage. Working together, the countries of South Asia could make a major contribution towards meeting the 2030 Agenda for Sustainable Development.