Kathmandu, April 3:

South Asia’s unprecedented growth, averaging close to six per cent per year since the 1990s, has created a new momentum for closer regional integration, said Praful Patel, World Bank vice-president for the South Asia region, states a press release.

Speaking ahead of the 14th SAARC Summit yesterday in Washington, Patel said there are clear signs that policymakers and the private sector in the region are pushing for closer integration.

He said, “regional cooperation can be a very effective tool in increasing trade, relieving energy shortages, improving connectivity, increasing investment, and promoting peace and stability.”

According to a recent World Bank study ‘South Asia: Growth and Regional Integration’, South Asia is the least integrated region in the world. Intra-regional trade is less than two per cent of GDP, compared to more than 20 per cent for East Asia. Annual trade between India and Pakistan, the bulk of which is routed through Dubai, is currently estimated at $1 billion, but could be as great as $9 billion.

In addition, cross-border investments, and the flow of ideas, crudely measured by the cross-border movement of people or the number of telephone calls, are all low for South Asia. Patel said, “Starting from such a low base, greater integration among South Asian countries could bring huge benefits to its people. Intra-regional trade in South Asia can increase to $20 billion by 2010 if trade barriers are lifted.”

Although South Asia has significantly reduced import tariffs, the cost of trading across borders is one of the highest. Trade can more than double if appropriate regional agreements are put in place.