xpansion of trade is one of the major benefits of regional economic connectivity. Regional pacts typically reduce tariff and non-tariff barriers and facilitate intra-regional trade through simplified customs procedures and logistics.

Regional connectivity also encourages specialisation and comparative advantage and lowers production costs through expanded markets. It also creates stable, predictable environments that attract FDI. As a result, cross-border value chains emerge and boost manufacturing and services.

The regional economies invest in shared infrastructure projects (transport corridors and energy grids). Improved connectivity reduces transaction costs and reliance on global markets and distant partners. This encourages trade diversification within the region.

Regional economic cooperation also results in political stability. Economic interdependence often fosters peace. Regional forums support dialogue and conflict resolution. Easier movement of professionals and collaborations in research and development accelerate technology and knowledge transfers.

Motivations for regional economic connectivity include better market access. In most cases the improved connectivity expands access for exports and helps smaller economies link with the larger ones. It also reduces dependence on global powers by fostering regional self-reliance.

Regional connectivity has helped nations tackle poverty, unemployment and infrastructure gaps. In South Asia these issues are on the rise. Cross-border energy, water and natural resource use is limited.

Regionally connected economies take joint action during pandemics, supply chain disruptions and financial crises. The dominant economy in the regional bloc acts as an anchor of stability by providing economic and political leadership (e.g., US in NAFTA, China in ASEAN+3). The leading economy imports from smaller economies, driving growth in the region.

It also acts as an investment provider by funding regional infrastructure or industrial investments. It leads in efforts to harmonise regulations, digital standards and financial systems. However, these traits are absent in the case of India, the dominant economy of South Asia.

When dominant regional economies are seen as exploitative, as has been the case with America since President Trump started raising tariff barriers, resentment and lack of trust mar their relations with the partner economies

South Asia lacks intra-regional connectivity. Regional accords elsewhere have boosted the weaker member economies. ASEAN, comprising 10 members mostly from Far-East Asia, is a good example of this..

The intra-regional trade in this bloc ranges between 22 and 25 percent. Most of its economies are sound and making progress. Japan was initially the biggest economy in the region. It outsourced much of its component manufacturing to Indonesia, Malaysia, South Korea and other neighbouring economies, which radually emerged as independent manufacturers of electronics, computers and automobiles. The bonding in the region is strong and the political disputes between member countries have subsided.

The European Union is another example of success of regional connectivity. It has all but ended the feuds between historically hostile member states. Almost 60 percent of the total trade in this bloc is conducted between member countries that have uniform tariffs on imports from anywhere in the world.

The NAFTA (North American Free Trade Agreement), comprising the United States, Canada and Mexico; remained in force from 1994 to 2000. It has since been replaced by the with an update of rules on digital trade, automotive rules of origin, labour and environmental standards, intellectual property protections and dispute resolution mechanisms. The intra-regional trade in USMA ranges from 40 to 45 percent.

Regionally connected economies take joint action during pandemics, supply chain disruptions and financial crises. The dominant economy in a regional bloc acts as an anchor of stability by providing economic and political leadership.

The AfCFTA includes all 55 member states of the African Union, though the pace of ratification and implementation has varied. 54 out of 55 AU countries have signed the AfCFTA agreement. Eritrea is the only country that has yet to sign it. As of 2024, 47+ countries have ratified the agreement and are working toward implementation.

Its key members include Egypt, Algeria, Morocco, Tunisia, Libya, Sudan from North Africa; Nigeria, Ghana, Senegal, Côte d’Ivoire, Burkina Faso from West Africa; Kenya, Ethiopia, Tanzania, Rwanda, Uganda from East Africa; Cameroon, Chad, Congo (Brazzaville), DR Congo from Central Africa and South Africa, Botswana, Namibia, Zimbabwe, Zambia from Southern Africa.

The objectives of the AfCFTA include creation of a single African market for goods and services. To facilitate free movement of people, investments and capital and boost intra-African trade, industrialisation and regional value chains.

The AfCFTA is being implemented in a phased way. In Phase I, the focus was on trade in goods and services, tariff schedulesand rules of origin. In Phase II, competition policy, intellectual property rights and investment were focused. In Phase III, in progress currently, e-commerce and digital trade are the fiocus.

The institutional structure of the bloc includes AfCFTA Secretariat based in Accra, Ghana, which oversees coordination and implementation. There is a council of ministers comprising trade ministers of member states. There is also a committee of senior trade officials that prepares technical work for ministers. Finally, there is a dispute settlement body that resolves trade disputes using legal protocols.

The trade framework under the AfCFTA includes trade liberalisation with a target of eliminating tariffs on 90 percent of goods over 5-10 years. The criteria for determining which goods qualify for preferential treatment is being sorted out (rules of origin). Mechanisms to identify and eliminate NTBs are also given shape. For digital platforms the NTB online tool, electronic payments system and Pan-African digital passport are planned.

Progress on the ground so far includes a guided trade initiative (GTI) launched in 2022 for pilot trade among eight countries. So far the focus has been on food, pharmaceuticals and textiles, etc. A Payment and Settlement System has been launched for cross-border transactions in local currencies.

There are still many operational challenges including infrastructure gaps (roads, ports, digital networks); limited industrial base in some countries; non-tariff barriers and bureaucracy; political will and coordination issues; and slow customs modernisation.

Still, this regional pact has generated a lot of economic activity in the region and some of its member countries have improved governance and transparency. Africa is now being seen as the next big growing market. The intra-regional trade share has reached 18 percent.

In the SAARC region, the intra-regional trade is limited to less than 5 percent –lowest among all other regional pacts. There are several reasons for this failure of regional connectivity in South Asia, including political tensions between India and Pakistan.

The conflict between the two has inhibited trust building and cooperation. Historical animosities and security concerns have trumped economic logic. The region also has poor infrastructure and limited cross-border rail, road and energy networks. The member countries maintain high tariff and non-tariff barriers. As an economic bloc, SAARC is politically weak. Progress is often stalled by vetoes. The smaller countries fear domination by India which has not demonstrated the cooperative spirit needed for bloc building.

Another problem is the lack of private sector keenness. The business communities of the member countries are less integrated and are often nationalistic in a narrow way.

The writer is a senior economic reporter.