Reimagining South Asian Economy

South Asia accounts for only 3.0 per cent of the world surface area, yet the region is home to nearly 1.5 billion people, about one-fifth of the world population. By 2030, the region is likely to represent about one-fourth of the world population with India expected to become the largest country in population size, surpassing China by around 2022. Consequently, South Asia has the highest population density in the world. Majority of its population still reside in rural areas. With 48 per cent inhabitants living in urban areas, South Asia is one of the least urbanised regions in the world. However, over the next decades, it is expected that the region will have a faster urbanisation growth and may outpace the rest of the world.
Although the region was able to attain the goal of halving poverty over the last twenty five years, over half a billion people in South Asia still live below the international poverty line. According to the Chronic Poverty Report 2015, most of the people classified as chronically poor are from the regions of South Asia and Sub-Saharan Africa. Besides, according to the 2015 Global Hunger Index (GHI), all the countries in the South Asian region, including Bangladesh, have GHI scores which are labelled as serious (data unavailable for Bhutan and the Maldives). On a positive side, there is evidence of a declining trend compared to earlier decades.
The agriculture sector in South Asia provides employment for about 49.2 per cent of the population, with total labour force participation rate (15-24 years) at 39.4 per cent (2014) and female labour force participation recorded at 30.5 per cent (2014). In contrast, it is observed that compared to the year 2005, both the values for the indicators have declined from 48.6 and 37.4 respectively.
Interestingly, the contribution of manufacturing to the world GDP (gross domestic product) share is facing a declining trend over the past two decades. The share fell from 21.4 per cent (1995) to 14.7 per cent (2014). The world is amidst a transition from a traditional manufacturing-intensive economy to a more service-based economy. It should, however, be noted that manufacturing is the path to development, and cause of economic growth and poverty alleviation.
Indeed in recent times, South Asia has been the second fastest developing region after East Asia. Thanks to the robust growth in India (the third largest economy), the economic growth for this particular region is forecast to gradually accelerate from 7.1 per cent in 2016 to 7.3 per cent in 2017. South Asia generated about 8.7 per cent of the global GDP (in PPP terms) in 2015.
Absence of primary energy and electricity continues to remain one of the most crucial constraints to sustained rapid growth in South Asia. Disaggregating this further, it can be observed that whilst 90.2 per cent of the urban population have access to electricity, this value falls to a mere 49.3 per cent for the rural population (2012). Benefits from energy trade in South Asia are thought to be enormous; however, in spite of some recent progress, opportunities of cross-border and joint exploitation of energy resources have remained largely untapped.
Establishing good governance is a major challenge for South Asian countries. According to World Governance Indicators (WGI), South Asia needs to make considerable improvement in curbing corruption, establishing voice and accountability, instituting political stability and reducing violence, and ensuring government effectiveness, regulatory quality and rule of law in the region.
Underpinned by fiscal and trade reforms, the degree of openness of South Asian economies has been on the rise recently. This has not only created a scope to take advantage of the opportunities brought about by globalisation, but has also introduced new challenges. However, the pace of cooperation in South Asia has been unsatisfactory, with about 5.15 per cent of global trade being intra-regional trade. In contrast, 25 per cent of ASEAN's (Association of Southeast Asian Nations) trade is within its own region. Poor intra-regional investment and lack of connectivity and trade facilitation have led to a situation where South Asian countries are referred to as 'distant neighbours.' Nevertheless, a number of promising regional initiatives have been taken in recent times including the establishment of South Asian Free Trade Area (SAFTA) and SAARC [South Asian Association for Regional Cooperation] Framework Agreement on Services (SAFAS), SAARC Agreement on Trade in Services (SATIS), and the creation of SAARC Food Bank and South Asian Regional Standards Organisation (SARSO) to strengthen regional cooperation. In addition to these initiatives already undertaken, the removal of tariff and non-tariff barriers and ensuring better connectivity will boost intra-regional trade in South Asia by more than 3.5 times.
South Asia as a region has made considerable progress in attaining a number of targets under the Millennium Development Goals (MDGs) including MDGs 1, 2, 3, 6 and 7. However, the progress was uneven among the South Asian countries. The region could not make progress in children reaching the last grade in schools. In this backdrop, attainment of the ambitious targets of the SDGs will be a big challenge.
According to the SDG Index and Dashboards (2016), for SAARC countries, greater commitment is needed to achieve the objectives stated in the 2030 Agenda for Sustainable Development through better balancing of environmental sustainability with economic performance. Apart from Bhutan and Sri Lanka, the rest of the countries' performance for attainment of the targets needs to be improved   significantly. All the countries present in the SAARC region have made considerable progress in SDG 10: "Reduced Inequalities." However, major challenges remain for all countries for the rest of the targets.
It is maintained that the aspirations of fostering South Asian cooperation have often remained hostage to the various bilateral tensions and irritants. On the other hand, there is a genuine yearning on the part of the common people in the region for a South Asia which is economically developed, socially just and environmentally sustainable. In this backdrop, there is an increasing need for renewed efforts towards building bridges and common understanding among all key stakeholders in the region.
Regional cooperation in South Asia can help the member countries attain the SDGs over the next fifteen years. However, it needs to be recognised that energetic steps need to be taken to advance the cause of South Asian integration. It is important to note in this context that at present important initiatives are being taken on a bilateral basis to promote and strengthen South Asian cooperation. A number of initiatives at civil society level are playing an important role in contributing towards this. It is hoped that initiatives such as the South Asia Economic Summit (SAES) will help promote regional cooperation and integration in this region and reimagine a prosperous, sustainable and equitable South Asia in 2030.

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Details of the conference are available at www.saes9.cpd.org.bd