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Towards a South Asian century
Towards a South Asian century

GAGAN THAPA; YURENDRA BASNETT

South Asian leaders have gathered in Kathmandu for the Saarc Summit. How can they set in motion a South Asian century?
The South Asian region is becoming an increasingly important and large market in the global economy. It is home to two-thirds of the world’s population. High economic and trade growth, a large, young, and dynamic workforce, a growing middle class, and increasing human capital all point to the possibility of the 21st century also being a South Asian century.  


But South Asia is also home to half of the world’s poor. About 500 million people in the region live on less than one dollar a day. Increasing inter- and intra-country inequalities are holding back progress. This does not need to, and should not, remain the case. Lifting people out of poverty and providing increasing standards of living can be brought about by leveraging socially inclusive and environmentally sustainable economic transformation.

 

Unrealised potential
So, why does this potential remain unrealised?


There is a huge trust deficit in the South Asian region. We continue to live in a region shaped largely by the emotions of post-independence. Consequently, our vision has been myopic. Most policies in the region are viewed through a narrow national, or rather sub-national, lens.


The inertia surrounding change in South Asia can be enormous. Progress in regional cooperation tends to ebb and flow in parallel with political and economic relations between India and Pakistan. The region is unique in that most of the countries in it are connected to each other via a single country—India. This gives rise to important political economy dynamics for regional cooperation, which inevitably has to be negotiated through India. So unless India moves, it is difficult for the rest of the region to move.


But there are rays of hope. India’s Prime Minister Narendra Modi has placed greater importance on the region, renewing possibilities for regional cooperation. A different South Asia is also emerging—young, dynamic, and ambitious. This South Asia has shed the shackles of post-independence and sees the region through the modern lens of shared and lived experiences. It is this South Asia that needs to come to the fore in driving regional cooperation and constructing a South Asian century.  

 

Acting as a region
How do we break with the past and set a new course for the region?


Transforming the 21st century into a South Asian century will require above-all an enlightened and embedded vision. This will involve an iterative approach between national and regional levels in choosing and designing regional policies. Regional policy choices need to be concomitant with national contextual realities, which in turn need to evolve with regional dynamism.


Regional economic cooperation will be the cornerstone. A regional approach to solving collective problems must not be seen as being zero-sum with national competencies. On the contrary, it is about scaling up what works at the national level and filling the gaps between different sets of national policies. One cannot, however, be dismissive of the political constraints that have thus far held back regional cooperation. For regional cooperation to work, it is important that it be enlightened.


The focus of regional cooperation should be on the things that really matter to the everyday lives of people—for example, addressing constraints faced by lorry drivers when moving goods from one place to another, or those faced by young entrepreneurs wishing to expand their businesses. Only when regional cooperation delivers tangible benefits for the citizens of South Asia will political buy-in begin to increase.


‘Business as usual’ at the Saarc Summit will not work. The draft Kathmandu declaration includes many of the issues raised here. But the declaration alone will not be sufficient. We would like to see leaders commit to delivering measurable and accountable results on six priorities by the next Saarc Summit. This will help move regional cooperation from truisms to actions.

 

Six prescriptions
First, create space for the emergence of a South Asian identity. For regional cooperation to succeed, it must be founded on the emergence of a constituency of people that can relate to it as well as own it. The South Asian identity must not just be a narrative, but must be reflected in the lived experiences of the people of South Asia. Should a Nepali be charged the same entrance fee as a European at the Red Fort in Delhi? Should a South Asian national have to queue alongside nationals of all other countries at passport control?


Second, develop a blueprint for a regional electricity grid. High population and economic growth coupled with rising standards of living in South Asia have led to a huge demand for energy. Power cuts damage industry and curtail creativity. People in South Asia do not have to live with power cuts: we can use clean and renewable energy to power the region and de-couple economic growth from rising carbon emission.


Third, South Asia needs a road and railway network. Expanding and connecting the transport network will be central in deepening regional integration. This will require establishing an uninterrupted and harmonised road and railway network in the whole of South Asia. Declarations on building road and railway infrastructure are not short in supply, but actions and results are. We should consider setting up a South Asian regional infrastructure development bank to invest in increasing and improving the stock of infrastructure for hub-to-hub transport.   


Fourth, facilitate regional value chains for goods and services. One of the things distinguishing the growth experience of East Asia from that of South Asia is the presence in the former of highly sophisticated regional production networks. Such depth of economic collaboration in production processes is rare in South Asia. Many firms in South Asia procure inputs from outside the region, even though there are globally competitive suppliers within the region. Regional policies on trade, infrastructure, and business networking can help develop regional production networks so that the benefits of growth are more widely distributed.


Fifth, foster a common, regional market for services and investment. The region needs to be ambitious and bolder on trade in services, but also sensitive to differing capacities in the region. We should create a common, regional market in a sequenced manner, for services sectors such as telecommunications, transportation, finance, and business services.


Finally, remove barriers to trade. While in Singapore and Thailand, it takes just a few hours to clear goods at ports, in South Asia it takes a few days. Such delays impact the trade competitiveness of the whole region and in particular, those of (landlocked) countries that depend on regional ports for trade with the rest of the world. We need to build state-of-the-art South Asian trade corridors to catch up with rest of Asia.   


South Asia does not need to be home to the world’s poor. We can build a prosperous region. To do this, the next generation of leaders will need to harness the region’s potential through a combination of vision and action. We hope Modi and other South Asian leaders gathered in Kathmandu will deliver tangible benefits to the people of South Asia, and steer the region towards a truly South Asian century.

Posted On: 26th November, 2014

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