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The third decade of Saarc
Sridhar Khatri assesses where things stand and what needs to be done
Sridhar Khatri
Let me just cite a number of examples to support this argument. First is the case of poverty in South Asia. Looking at the two different periods, 1981 and 2001, there has been a marked improvement where the proportion of the extreme poor has gone down from 52 percent to 31 percent. Although this is not as significant as it was in East Asia, where the proportion plummeted from 58 percent to 15 percent, it is nevertheless a significant achievement for the region. The second case is that of economic growth, which has been exemplified by India since it began its liberalization programs in the 1990s. India is now the world's fourth largest economic power, and many expect it to surpass Japan to become the third largest very soon. The entrepreneurs, especially in the IT sector, are the catalyst in India's economic miracle, and have managed to fuel growth through the service sector and domestic consumption. India has managed to maintain an average of 7.5 percent growth rate for the past five years, despite archaic labour laws and "bureaucratic high modernism." The contribution of India (and one can add also China) as an engine of growth for South Asia will be substantial, since it accounts for (in 2005) about 80 percent of South Asia's GDP, trade, and regional growth. In South Asia, India's development into a regional hub would attract more foreign direct investments into India, and from India to other South Asian countries, which would boost economic growth in the whole region. As the latest ADB report states: "India is not only crucial for the success of regional trade cooperation in South Asia; it could also transform the development and growth pattern of the entire region." The latest report by the World Bank, entitled Global Economic Prospects: Managing the Next Wave of Globalization, is even more upbeat. It predicts that in the next 25 years the growth in the global economy will be powered by the developing countries, whose share in global output will increase from about one-fifth of the global economy to nearly one-third. It means that some of the key drivers in the global economy will be China and some of the countries from South Asia. There are today six developing countries which have populations greater than 100 million and GDP of more than $100 billion. By 2030, there will be 10 countries that would have reached the twin 100s threshold, and four of them will be from the vicinity of South Asia. In addition to India and China, who have already reached that level, Pakistan and Bangladesh are also likely to be part of this dynamic group. Sridhar Khatri is Executive Director, South Asia Centre for Policy Studies. |
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