South Asia and the Market Economy Dipankar Sengupta Dept of Economics, University of Jammu for the South Asia Youth Summit (24 th -25 th Nov 2008) New Delhi

INTRODUCTION South Asia once a single economic unit now divided into several economic units with ruptured economic relations Political Differences not the only reason- Dirigiste Policies also accentuated this divide

The Absurdities of Economic Division Age old economic ties ruptured Jute Industry in Bengal New skills, new farming practices, new industries had to be set up.

Dirigiste Policies.. Hostile Relations.. Tensions with Pakistan Nature of India's Economic Policies Looking in..reversed under the Look East Policy Ignoring the terrain Bangladesh's Carrying Capacity End Result- India locked itself in without locking Bangladesh out!

Trade Relations in South Asia Modest.. Most studies indicate that trade is far below what could be expected..trade via Mid East indicates the potential trade.. Studies by SBP gives realistic numbers India-Sri Lanka Trade has witnessed a jump after the countries went in for a FTA

Need for Realism South Asian Trade will remain modest for some time Low Incomes Similar Economic Structures- will compete in some markets South Asian Economic Community with free flow of goods and people means much more than increased trade

Freeing South Asia A Free South Asian Economic Community is more than increased trade Apart from Trade it releases several regions from its geographical confines North East, J&K, Bangladesh, Enables the countries to tap energy sources and markets Enables the economies to free ride into each others markets

EIB- East India Bangladesh Landlocked North East- Overburdened Bangladesh The problem of illegal immigration Self created? Transit Routes for the North East Bangladesh's Gateway to China

North India and Pakistan Pakistan as J&K's gateway to India? Uri – Muzzaffarabad Road, Re-entry through Wagah Industrial Growth in JK becomes more feasible The Access to Central Asia The KKH opens Central Asia to India Through Zahedan

Reorientation of the Central Asian Economies As the former Soviet Central Asia re- orients Southwards from East- sources of energy, basic metals open up. A new Market for South Asian products A new destination for investment as corporates take into account global capacities eg. Ispat (Dutch) in Kazakhstan

Importance of Private Players The most sustainable driver of economic integration will be economic profit Identify stakeholders Quantify gains Build Coalitions

To Sum Up.. South Asian economic integration is more than the sum of its parts Trade estimates will disappoint The economic benefits of economic integration will not