Pattern of Intraregional Trade: Unbundling a South Asian Conundrum

Abul Basher
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Abul Basher: Research Fellow, Bangladesh Institute of Development Studies (BIDS) .

Bangladesh Development Studies, 2014, vol. 37, issue 04, 1-16

Abstract: South Asia is one of the least integrated regions of the world. While individual member countries have been successfully increased their share of trade in the global market, growth of intraregional trade lags behind the growth of the region’s overall trade. This paper analyses the reasons for this apparently puzzling nature of South Asian economies. The paper decomposes the regional trade statistics between 2000 and 2012 to analyse the dynamics of regional trade and factors behind it. The findings suggest that one of the missing elements is the inability of the region to meet its demand for imports internally with the change of the economic structure. India, being the largest economy, is the main driver of the intraregional trade. The trade preference of the SAARC countries has been changing disfavouring India. This is mainly due to India’s relative inability to meet the import demand of other South Asian countries. In the absence of strengthened economic ability to meet their own demand, the scope for intra-industry trade, emergence of regional value chain, and trade in new areas like services, intraregional trade is unlikely to register any notable improvements

Keywords: South Asia; Regional Integration; Bilateral Trade (search for similar items in EconPapers)
JEL-codes: F15 F40 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:ris:badest:0578

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