Edited by Ulrich Volz
Chapter 1: SAARC: Changing Realities, Opportunities and Challenges
1. SAARC: changing realities, opportunities and challenges* Rajiv Kumar 1.1 INTRODUCTION There is a perceptible change in the environment for promoting regional cooperation and economic integration in South Asia. The change is perhaps one of the positive outcomes of economic reforms that have been undertaken in nearly all of the South Asian economies since the beginning of the 1990s. These reforms, most notably in India and Pakistan, have not only spurred economic growth in the region, especially in India, but also made the region generally more open to greater integration both within the region and with the rest of the world. India’s growth has given it greater confidence in opening its markets to its neighbours and at the same time clearly brought home to its neighbours the advantages of greater access to India’s large and growing market. Other factors that have contributed to this positive stance towards regional cooperation in South Asia are the positive demonstration effects of bilateral trade agreements in the region in recent years, for example the Indo-Sri Lankan Free Trade Agreement (cf. Chapter 7); recognition by India and other governments that a South Asia lagging in regional cooperation cannot expect to play its due role in the global community and last but not least the growing impact of a resurgent Chinese economy that has necessitated a deep rethink of neighbourhood policies by regions’ governments, particularly by India. These changing realities in South Asia necessitate a fresh look at the prospects and challenges for regional economic integration...
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