Chapter 18 - South Asia in the Asian Economy: Struggling to Overcome History

Summary

South Asia has remained economically backward compared to most of Asia. Despite comprising India – the world's twelfth largest and one of the fastest growing emerging market economies – the region suffers from low per capita incomes, poor connectivity, inadequate human development and pervasive poverty. The Indian economy reflects these traits conspicuously mirroring what most of the region typifies. The economic potential of the region is enormous given its abundant natural and human resources and strategic geography. Yet, it fails to give a better life to vast numbers of its people.

South Asia's current and future economic outlooks, have been, and will be shaped by three “P”s: people, potential and politics. Being one of the world's most populous regions, people will be critical in determining South Asia's economic prospects. Its potential for achieving high economic growth can hardly be overstated. Last, but not the least, politics is inseparable from regional economics. Much of the region's politics is inspired by varied concerns of its people articulated by diverse interest groups. The populism-laden politics is usually counterproductive to harnessing greater economic potential. It is hardly surprising that policies aiming at long-term economic benefits are time and again circumscribed in scope and scale for safeguarding short-term political interests. The regional political economy is distinct from the rest of Asia in its unabashed eagerness to maximize ad hoc political gains.