Altered geopolitical landscape and South Asia's commercial structure
In a world grappling with a sluggish economy and mounting risks, South Asia, the most populated region in the world, continues to experience rapid growth. A new paper by Ganeshan Wignaraja, Amit Bhandari, and Aliasger Bootwalla, published by Gateway House, offers recommendations for closer regional economic integration to help South Asia navigate these challenging times.
The paper, titled "Deepening South Asia's Economic Integration," analyses the region's trade architecture in the context of the global economy's tepid growth in the 2020s. It provides a comprehensive roadmap for South Asia to strengthen its economic position within global trade networks.
The authors propose a multi-pronged approach to achieve this goal.
Infrastructure Development
To reduce trade costs and improve connectivity, the paper recommends enhancing transport and logistics infrastructure such as ports, railways, and multimodal corridors. Projects like Sri Lanka’s Port of Colombo expansion and Pakistan’s strategic roads linking to Central Asia are highlighted as critical gateways facilitating regional trade.
Digitalization for Trade Facilitation
The authors also emphasize the importance of leveraging digitalization for trade facilitation. Digital services and infrastructure investments are seen as essential growth drivers for South Asia’s fragmented economies, enabling quicker, more efficient cross-border commerce and bypassing border delays.
Collaborative Investment and Policy Alignment
Promoting collaborative investment and policy coordination is another key recommendation. This includes harmonizing customs procedures, establishing special economic zones, and creating regulatory frameworks that support equitable growth and inclusiveness across member states.
Building Resilience
The paper also stresses the need for South Asia to build resilience through regional cooperation. This involves integrating value chains and industrial development beyond commodities exports, focusing on processed goods and services to boost competitiveness and economic diversification.
The authors underscore that realizing these benefits requires sustained political leadership, robust policy frameworks, significant infrastructure investment, and alignment of strategic interests among South Asian countries. The lessons from other regional integration experiences globally are echoed in the paper.
The paper, which focuses on the period since the Covid-19 pandemic and extends up to April 2025, also examines four issues: messy geopolitics, shifts in China-centric global supply chains to South Asia, patterns of regional energy connectivity and cooperation in South Asia, and the effectiveness of regional institutions for South Asia's trade and regionalism.
Furthermore, the paper draws parallels between the current global economy and the economic uncertainties and trade protectionism of the 1930s era, underscoring the need for South Asia to act swiftly and decisively to secure its economic future.
In conclusion, the Gateway House analysis advocates a comprehensive approach centered on infrastructure, digital trade facilitation, policy harmonization, and investment collaboration to deepen South Asia’s economic integration and improve its position in global trade networks. The paper is available online for readers interested in learning more.
- The paper, published by Gateway House, suggests that strengthening South Asia's economic position within global trade networks necessitates a focus on infrastructure development, including port, railway, and multimodal corridor enhancements.
- digitalization plays a crucial role in facilitating trade in South Asia, with the authors advocating for digital services and infrastructure investments to enable quicker, more efficient cross-border commerce.
- The authors propose fostering collaborative investment and policy coordination as a means to achieve economic integration, with recommendations for harmonizing customs procedures, creating special economic zones, and establishing regulatory frameworks for equitable growth.
- Resilience is highlighted as a necessity for South Asia in the paper, with a need for regional cooperation to integrate value chains beyond commodities exports, focusing on processed goods and services to boost competitiveness and economic diversification.
