Regional Integration in South Asia : What Role for Trade Facilitation?

Abstract

The trade performance of countries in
 South Asia over the past two decades has been poor relative
 to other regions. Exports from South Asia have doubled over
 the past 20 years to approximately USD 100 billion. In
 contrast, East Asia's exports grew ten times over the
 same period. The low level of intraregional trade has
 contributed to weak export performance in South Asia. The
 empirical analysis in this paper demonstrates gains to trade
 in the region from reform and capacity building in trade
 facilitation at the regional level. When considering
 intraregional trade, if countries in South Asia raise
 capacity halfway to East Asia's average, trade is
 estimated to rise by USD 2.6 billion. This is approximately
 60 percent of the total intraregional trade in South Asia.
 Countries in the region also have a stake in the success of
 efforts to promote capacity building outside its borders.
 If South Asia and the rest of the world were to raise their
 levels of trade facilitation halfway to the East Asian
 average, the gains to the region would be estimated at USD
 36 billion. Out of those gains, about 87 percent of the
 total would be generated from South Asia's own efforts
 (leaving the rest of the world unchanged). In summary, we
 find that the South Asian region's expansion of trade
 can be substantially advanced with programs of concrete
 action to address barriers to trade facilitation to advance
 regional goals.