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Sanguinity and aspiration toward South Asian Regional integration: a case study of the South Asian Free Trade Area (SAFTA) Agreement


  • Kabir, ASM


The expansion of regional economic cooperation was one of the major developments in the world political economy after the Second World War. Factors that thrust countries closer were both economic and political but economic factors prevailed; the classic example was the EU and ASEAN where economic dimension have brought long time foes in the same dais. The present international economic situation characterized by stagnant growth, recessionary conditions, and protectionist tendencies in the developed countries has seriously underpinned the economic growth in developing countries. The worsening terms of trade, acute balance of payment crisis and debt burden on developing countries have further crippled the potential economic growth of these countries. Therefore current world economic conditions call for a greater economic cooperation among the developing countries. Around 330 agreements are notified in World Trade Organization (WTO). Apart from Mongolia, all WTO members are involved in one or more regional trade agreements. Unsuccessful WTO talks in Cancun increased a world-wide trend towards regional cooperation and integration, such as EU, NAFTA, CAFTA, MERCOSUR, ASEAN, SAARC etc. The latest report by the World Bank, entitled Global Economic Prospects: Managing the Next Wave of Globalization predicts that in the next 25 years the growth in the global economy will be powered by the developing countries, whose share in global output will increase from about one-fifth of the global economy to nearly one-third. It means that some of the key drivers in the global economy will be China and some of the countries from South Asia. There are today six developing countries which have populations greater than 100 million and GDP of more than $100 billion. By 2030, there will be 10 countries that would have reached the twin 100s threshold, and four of them will be from the vicinity of South Asia. In addition to India and China, who have already reached that level, Pakistan and Bangladesh are also likely to be part of this dynamic group. Increased participation in global trade was an important determinant of economic growth of the catch-up economies. This is one reason why South Asia has lagged and has not been a catch-up economy. Could the decision of the 2004 SAARC summit change South Asia’s economic structure and move towards economic union? Can South Asia become a major player in the global economic and trading system? The following report aims to come across the answer of the above issue regarding SAFTA.

Suggested Citation

  • Kabir, ASM, 2007. "Sanguinity and aspiration toward South Asian Regional integration: a case study of the South Asian Free Trade Area (SAFTA) Agreement," MPRA Paper 3871, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:3871

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    References listed on IDEAS

    1. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72.
    2. Lahiri, Sajal, 1998. "Controversy: Regionalism versus Multilateralism," Economic Journal, Royal Economic Society, vol. 108(449), pages 1126-1127, July.
    3. Clark, Ximena & Dollar, David & Micco, Alejandro, 2004. "Port efficiency, maritime transport costs, and bilateral trade," Journal of Development Economics, Elsevier, vol. 75(2), pages 417-450, December.
    4. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages 4-21, February.
    5. 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.
    6. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
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    Cited by:

    1. Kumar, Rajiv & Singh, Manjeeta, 2009. "India’s Role in South Asia Trade and Investment Integration," Working Papers on Regional Economic Integration 32, Asian Development Bank.
    2. Md. Joynal Abdin, 2009. "An Analysis of SAFTA in the Context of Bangladesh," Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS No. 6, Bangladesh Development Research Center (BDRC).

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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