Need for Economic Integration of South Asia

6 Pages Posted: 6 May 2009

Date Written: May 6, 2009


Though South Asia covers 4,488,300 sq kms of the world's surface area with a population of 1.5 billion, still it has only a negligible share of the world's total volume of trade. Most of the people of this region are living below the poverty line. Only mutual initiatives towards economic integration can play a vital role in upgrading the standards of living of the poor people.

Economic integration in general is a process of removing progressively the discriminations which occur at the national borders. Such discrimination may affect the flow of goods and services and the movement of factors of production either directly or through economic activity via the factor of production.

Academicians have predicted two opposite outcomes, both positive and negative. Negative effects include the possibility that the infant industrial sector may not survive the open market competition or that the sick industries might face ruin. On the other hand, positive effects in the short-run include inland 'trade-creation effects.' But that must outweigh trade diversion effects in order to achieve beneficial trade liberalization. However, apart from short-run benefits, there are also the long-run benefits such as greater technical efficiency due to greater competition, larger markets, higher consumer surpluses, and more foreign investments.

There are five main stages of regional integration such as free trade areas, customs unions, common market, economic union and total economic integration. Such stages are the outcome of policy decisions taken by regional inter-governmental forum and/or supranational institutions in order to affect the depth and breadth of regional integration.

Keywords: Economic Integration

JEL Classification: South Asia

Suggested Citation

Abdin, Md. Joynal, Need for Economic Integration of South Asia (May 6, 2009). Available at SSRN: or

Md. Joynal Abdin (Contact Author)

DCCI Business Institute (DBI) ( email )

DCCI Building (11th Floor), 65-66 Motijheel C/A
Dhaka, 1000

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