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South and South-West Asia (SSWA) region has been able to improve intra-regional trade during the last decade. However, much is left to be done to realise the full trade potential between SSWA countries, which also share important complementarities that can become the basis of region-wide production networks. Such networks would enhance the combined productivity and competitiveness of SSWA, but their development is stifled by poor intra-regional connectivity status. The quality and capacity of the subregion’s infrastructure, both on the national and crossborder levels, is certainly a matter of concern. SSWA regional economic cooperation programmes have to be made much stronger to address regional infrastructure needs and build enabling institutions and policies. This paper observes, in the light of a case study of regional trade in ‘parts and components’, that SSWA countries must improve its supply chain connectivity considerably in order to effectively link their production units with global value chains. Further, a comparative analysis of efficiency across different modes of cross-border transportation in the subregion shows that overland transport corridors such as TIPI-BM and ITIDKD
proposed by ESCAP can play important role in the development of regional production networks. In order to improve overland connectivity, a comprehensive and cooperative approach is needed to address the physical (hard) and non-physical (soft) infrastructure issues. The paper also supports the need of a regional connectivity masterplan to guide most optimal development of its connectivity requirements.

Subregional Office for South and South-West Asia +91 11 3097 3700 [email protected]