Global trade and South Asia
It is possible to demonstrate South Asia’s gains in extra-regional trade flows.
We assume collective action in capacity building between the South Asia region as one
group and the ROW as another group. As shown in Table II, if South Asia and the
ROW upgrade their capacity in trade facilitation simultaneously (collective action),
world total trade gains would be $31 billion in 2007 and $26 billion in 2010. Note that
in estimating total trade gains we do not count the increase in intra-regional trade
flows in South Asia.
The total trade gains to South Asia from unilateral action in the region are
estimated at approximately $25 billion in 2007 and $18 billion in 2010. The gains from
ROW’s improvement are estimated at approximately $6 billion in 2007 and $9 billion in
2010. The former represents about 7-8 percent of the region’s extra-regional trade.
It is important to note that 80 percent (in 2007) and 67 percent (in 2010) of the total
trade gains to South Asia are generated from its own improvement. The most
promising area for focus appears to be the regulatory environment, as approximately a
$24 billion (in 2007) and $19 billion (in 2010) increase is anticipated.
One might consider a different target level than the global average for South Asia,
because it may be difficult for low-income countries to reach the global average. Thus,
we also consider the ASEAN average, as its member countries are largely more
developed than South Asian countries, whereas their trade facilitation status is not as
good as the global average, which also reflects the performance of industrialized
countries. In this way, trade between ASEAN and South Asia has recently been
increasing, partly due to their geographical proximity.
When the target is set at half the ASEAN average, instead of half the global
average, based on the indicators in 2010, South Asia gains $13 billion overall, which is
38 percent lower than in the latter case. This confirms that the ASEAN-based target
provides an intermediate goal for South Asia to achieve before aiming for the global
target. However, the itemized gains among the indicators are quite heterogeneous.
t by making regulations
more consistent and transparent and by curbing corruption.