Growth linked to improving regional trade

LAHORE:Strengthening regional trade is need of the hour as it is a more effective substitute for achieving comparative advantages in international trade for sustainable economic growth.

Talking to commerce reporters here on Monday, Saarc Chamber of Commerce and Industry’s former president Iftikhar Ali Malik said that South Asian countries can take all the advantages of regional economic integration to enhance their bargaining power in international trade by representing a market that accounts for approximately 25.29 percent of the world’s population.

He was of the view that integration would also make the region more attractive for foreign and local investors, similar to EU (European Union), ASEAN (Association of South East Asian Nations) and USMCA (United States-Mexico-Canada Agreement).

Unfortunately, South Asia is currently the least economically integrated region in the world, with regional trade accounting for only about five percent of the total potential trade, he added. Malik said the potential for intraregional trade in South Asia is estimated to be two times its current level which indicates a significant 67 percent of unrealised trade opportunities.

If potentials are exploited, the region could see a benefit of approximately three percent of its GDP. He said the primary barrier to increase regional trade is political issues. When political considerations are prioritised over economic benefits, the costs can be significant for the region. As a result, around 40 percent of the world’s poor reside in South Asia, making it the region with the second-highest poverty rate after Africa. He said political leadership must recognise this reality and learn from the experiences of the EU and ASEAN understanding that economic development should not be sacrificed for political gain. He cited that US and other global leaders in the West share a common goal of industrial policy (IP) which are state-led government programmes such as trade protection, subsidies, tax incentives and R&D funding -that support strategic industries or sectors which aim to promote the competitiveness of local industry, protect jobs and enhance growth.