The South Asian Association for Regional Cooperation or SAARC was created to promote economic integrity and cooperation among 7 South Asian nations namely India, Bangladesh, Pakistan, Bhutan, Nepal, Maldives, and Sri Lanka. The Association was formed in 1985 with the aim to ensure social and economic development of the member countries. However, over the years it has been seen that SAARC mainly worked towards development of economic relationship among the SAARC nations. Attempts are also on to further trade relations with the member nations of ASEAN (Association of South East Asian Nations) and the European Union.
In spite of lying in the vicinity of one another, trading activities were restricted among the SAARC nations. Over the years, there has significant improvement in the trade relations among the seven SAARC members. The focus has been shifted to get access to the markets of the other members. Methods have also been devised to attract foreign direct investments to strengthen economic infrastructures of the SAARC nations. All these initiatives point towards an improvement in the economic relationship among the 7 South Asian countries.
Despite the sincere attempts of the Association, there are several factors that stand in the way of economic integrity among the SAARC nations. The clashes between India and the neighboring countries have prevented the SAARC members to make the most of the economic benefits derived from the Association. This has prompted the South Asian countries to go for bilateral trading activities instead of getting involved in multilateral trade agreements. However, the Association is expected to take more proactive steps to improve the economic relationship among its members. Besides devising policies for economic integration, SAARC is supposed to function as a medium to facilitate discussions among the South Asian nations. Seminars and conferences are going to be helpful measures for promoting cross border trade and investment.
As an aftermath of globalization, Indian government has resorted to open trade policy. The economic reforms of early 1990s have opened an array of challenges for the Indian entrepreneurs. The growth rate of the Indian economy was around 7% during the period from 1994-1997. The inflow of foreign fund also recorded substantial increase.
All these resulted from the flexible economic policies adopted by the Indian government. The economic prosperity of India prompted the other SAARC members to seek resort to international trade as a platform for economic growth. Both Sri Lanka and Nepal have shown their interests to enhance intra regional trade. Bangladesh is also following the same trend. With the increased intra regional trading activities, the economic relationship among the SAARC nations is bound to be stronger in future.
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Professor of Economics & Director of the Earth Institute at Columbia University. Special Adviser to the UN Secretary-General on the Millennium Development Goals. Founder & co-President of the Millennium Promise Alliance.
Chancellor of the Exchequer of the United Kingdom from 1992 to 2007. Prime Minister of the UK between 2007 and 2010. Inaugural 'Distinguished Leader in Residence' at New York University. Advisor at World Economic Forum
Mario I. Blejer is a former governor of the Central Bank of Argentina and former Director of the Center for Central Banking Studies at the Bank of England. Eduardo Levy Yeyati is Professor of Economics at Universidad Torcuato Di Tella and Senior Fellow at The Brookings Institution.
Vice President and Director of the Global Economy and Development Program at the Brookings Institution. Former Turkish Minister of State for Economic Affairs. Head of the United Nations Development Program (UNDP) from 2005-2009.
James W. Harpel Professor of Capital Formation and Growth at the John F. Kennedy School of Government in Harvard University. Director of Program in International Finance and Macroeconomics at the National Bureau of Economic Research.