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The Political Economy of Trade Integration in South Asia: The Role of India


  • Dushni Weerakoon


Abstract The South Asian regional trade integration process to date has generated only limited enthusiasm. It suffers from significant shortcomings, primarily on account of a very cautious approach adopted to achieve the ultimate objective of 'free trade' within the region. In turn, this has led to a fragmentation of the integration process, with some of the partners of the South Asian Association for Regional Cooperation (SAARC) bloc opting for a speedier and more liberal bilateral process with India. India's engagement remains the critical feature as the single most important trading partner for almost all the other South Asian countries. However, the dynamics of Indian economic integration initiatives too have been changing rapidly, whereby it is looking increasingly to strengthen its economic relations with the wider Asian region. In this context, the question of India's willingness to give leadership to carry the rest of South Asia as the bridge that connects the region to East Asia needs to be examined. The current evidence suggests that India has attempted to do so via a host of bilateral and regional arrangements, but that the divergences in strategic interests amongst SAARC countries has left Pakistan on the margins of an evolving scheme of overlapping trade initiatives in South Asia. Thus, while something approximating 'free trade' in South Asia appears to be taking shape, it is unlikely to take the form of an inclusive South Asian regional integration process envisaged by SAARC. Copyright 2010 Blackwell Publishing Ltd.

Suggested Citation

  • Dushni Weerakoon, 2010. "The Political Economy of Trade Integration in South Asia: The Role of India," The World Economy, Wiley Blackwell, vol. 33(7), pages 916-927, July.
  • Handle: RePEc:bla:worlde:v:33:y:2010:i:7:p:916-927

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    References listed on IDEAS

    1. Jaime De Melo & Arvind Panagariya & Dani Rodrik, 2015. "The New Regionalism: A Country Perspective," World Scientific Book Chapters,in: Developing Countries in the World Economy, chapter 14, pages 323-357 World Scientific Publishing Co. Pte. Ltd..
    2. Arvind Panagariya, 2003. "South Asia: Does Preferential Trade Liberalisation Make Sense?," The World Economy, Wiley Blackwell, vol. 26(9), pages 1279-1291, September.
    3. Jayatilleke S. Bandara & Wusheng Yu, 2003. "How Desirable is the South Asian Free Trade Area? A Quantitative Economic Assessment," The World Economy, Wiley Blackwell, vol. 26(9), pages 1293-1323, September.
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    Cited by:

    1. Peter Morgan & Michael G. Plummer & Ganeshan Wignaraja & Fan Zhai, 2015. "Economic Implications of Deeper South Asian–Southeast Asian Integration: A CGE Approach," Asian Economic Papers, MIT Press, vol. 14(3), pages 63-81, Fall.
    2. Md. Abdur Rahman Forhad, 2014. "How many currencies in Saarc countries? a multivariate structural var approach," Journal of Developing Areas, Tennessee State University, College of Business, vol. 48(4), pages 265-286, October-D.
    3. Namra Awais, 2016. "Was the SAFTA (Phase II) Revision Successful? A Case Study of Bangladesh’s RMG Exports to India," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(1), pages 151-182, Jan-June.

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