Potential and Prospects of Strengthening Transport Connectivity for Regional Economic Integration in Southern Asia

Abstract

Despite geographical contiguity, Southern Asia remains among the least integrated sub-regions in the world. In the context of changed global context in the aftermath of the global financial crisis requiring the engines of growth to be rebalanced in favour of regional sources, inability to exploit the potential of regional economic integration and regional value chains can seriously limit the growth prospects of the sub-region. ESCAP analysis shows that while potential of intra-regional trade remains substantial, its exploitation is prevented by costs of trading within the sub-region which are often higher than trading with distant regions like the EU and North America, effectively denying the benefits of geographical proximity and contiguity to intra-regional trade. This situation is because of poorly developed surface transport networks and facilitation at the borders for mutual trade in the sub-region. This article reviews the key constraints on surface transport in the sub-region and makes a case for extended transport corridors that can maximize the network externalities while using the existing infrastructure optimally and benefiting the landlocked countries of the sub-region. It then highlights the relevance of two extended transport corridors—one a container train corridor and another a highway corridor proposed by UNESCAP—that can not only facilitate but have the potential to make the sub-region a hub of Asia–Europe trade. It is concluded with a few remarks on the way forward for a vision of transport connectivity in South Asia.