Breaking down Barriers to Regional Trade and Cooperation in South Asia

South Asia is one of the most dynamic regions in the world, but it is also one of the least integrated. Countries in the region trade with each other to a much lesser extent than countries in other developing areas, and foreign direct investment among South Asian countries is dismally low. But the region was not always divided: ancient empires transcended today's borders, its peoples share a common culture, and large ethnic groups span neighboring countries.This volume assesses the...
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South Asia is one of the most dynamic regions in the world, but it is also one of the least integrated. Countries in the region trade with each other to a much lesser extent than countries in other developing areas, and foreign direct investment among South Asian countries is dismally low. But the region was not always divided: ancient empires transcended today's borders, its peoples share a common culture, and large ethnic groups span neighboring countries.This volume assesses the gains that would result from greater regional integration in South Asia. It shows that the potential gains from regional electricity trade would be sizeable. Gains from trade liberalization would be substantial too, but in relative terms they would be more important for the smaller countries in the region. Cooperation in river basin management may not sufficiently stabilize water flows, but better forecasting and preparedness can reduce the human and economic cost of floods and droughts.The tension between potentially large economic gains and a substantial trust deficit sheds light on a possible way forward. The volume calls for seizing every opportunity to make progress across all sectors. It also calls for using bilateral and subregional deals as building blocks for broader agreements. Given the region's asymmetry, generous leadership by India is essential. But activism by the business communities of all countries and people-to-people exchanges are also critical to breaking the barriers to regional integration in South Asia.