The sorry state of South Asian economic integration

Article Title: The sorry state of South Asian economic integration

24-06-2025

International Relations Current Affairs Analysis

Context

Border disputes among South Asian nations significantly hamper trade and economic cooperation, preventing the region from achieving its full potential.

• Economic instability fuels unrest, while security threats disrupt trade and investment. No country can achieve lasting security without economic prosperity, and vice versa.

• The South Asian region is one of the least economically integrated regions in the world. Intraregional trade of South Asia (South Asian Free Trade Area or SAFTA) accounts for barely 5% to 7% of its total international trade, which is the lowest when compared to other trading blocs.

• In contrast, intraregional trade accounts for approximately 45% of total international trade within the European Union (EU), 22% within the Association of Southeast Asian Nations (ASEAN), and around 25% within North American Free Trade Agreement (NAFTA).

South Asian Association for Regional Cooperation (SAARC)

Origins of SAARC: Regional cooperation in South Asia was first discussed at the Asian Relations Conference (1947), the Baguio Conference (1950), and the Colombo Powers Conference (1954).

• The SAARC concept took shape in 1980 when Bangladesh's President Zia - Ur - Rahman proposed regional cooperation to promote peace and stability.

• SAARC was officially established on 8th December 1985, in Dhaka, Bangladesh, with 7 founding members: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.

Afghanistan joined as the 8th member in 2007.

Headquarter - Kathmandu, Nepal

• SAARC's agenda includes the South Asian Free Trade Area (SAFTA), established in 2004 and effective from 2006, aimed at reducing tariffs and promoting free trade in South Asia.

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