News Release - May 2, 1995Keywords: International Trade, Economic growth, Economic blocs, Foreign policy, South Asia, Indian sub-continent, New markets, Emerging markets, Patterns of Growth , foreign aid, Marketing plans for geo-economic areas, Import-export and bi-lateral relations of South Asian Nations
South Asia - wake up call
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SAARC - THE LARGEST GEO-ECONOMIC BLOC OF THE WORLD WITH 1.2 BILLION PEOPLE , TOTAL GDP (based on Purchasing power parity) of 3.57 trillion dollars and a combined average growth of over 7 % plans a common market SAPTA which could bring about a hope for the largest pool of poor people of the world, with a consumer base of over 425 Million people in the middle class bracket, larger than any other economic bloc of the world - could contribute a great deal to the ever evolving global economy.
Although in real terms the total GDP** (Pls see the last page) 894.1 Billion USD, the South Asia is maturing and is poised to become an important economic force forming a common market called SAPTA which could change the economic scenario of 7 countries-part of one of the most ancient living civilizations in the world - where all religions, faiths and ideologies of the world live together and this sleeping giant has started to move its arms as Indian sub-continent - the most ancient marketplace of the world - ushers into a new era which will change all traditionally known economic parameters.
CGTD - Center for Global Trade Development - an independent economic research organization - monitoring Economic development and International trade of all countries and geo-economic areas - has published a 300 pages report on one of the least known economic blocs of the world covering socio-economic and development issues and an in-depth study of 10 years of bilateral trade among the 7 member nations.
SAARC nations top leaders are meeting today in New Delhi to take firmer steps to form a common economic bloc which should change lives of hundreds of millions of people who have waited for last many decades for a change in their fortunes.
The purpose of the common market is mainly the realization of the advantages of increased specialization. A combined market of 1.2 billion people, almost one fourth of the world population, will permit the more rapid development of the most economical sectors of each industry. The total bi-lateral merchandise trade among these 7 nations could increase from virtually insignificant to over 15 billion dollars in next 4 to 5 years if they let their business men do trade freely. The increased service sector specially toursim will be boosted and will facilitate making a large common airline hub with combined itineraries.
National markets in cases of rest of the 6 nations, besides India - are too small for economic operation of certain industries except monopolies.
A larger market area will make possible mass-production without this drawback.
Attainments of these ends should, make the unified area a more powerful unit, ensure continual expansion, increase economic stability, raise standards of living and develop harmonious relations between all parties.
In South Asian family India is definitely the mother figure with sons like Nepal, Pakistan and Bangladesh and daughters like Sri Lanka, Bhutan and Maldives.
India - already a giant market place of coming years - may gradually open its borders with 6 of its neighbors which is bound to bring sweeping changes in their mutual relations thus reducing traditional conflicts.Nepal's economy with 2.9 Billion usd GDP is smaller than the eastern Indian state of Assam with a GDP of above 3.2 Billion both with a population of 22 million people.Pakistan's economy with 41.9 billion usd GDP is smaller than the 2 Indian states of Andhra Pradesh and Uttar Pradesh with a GDP of over 43 Billion usd.Bangladesh with 146 million population and with a GDP of 23.8 billion usd is surpassed byone Indian state of Maharashtra with 24.9 billion usd GDP and with a population of79 Million people.Sri Lanka with the maximum GNP per capita of $540 and with total GDP of 8.7 billion usdis less than the Northern Indian state of Punjab with a GDP of over 9.6 Billion usd with Punjab's population of 20.2 M and Sri Lanka with a population of 21 M.Punjab state has 50,362 sq KM area while Sri Lanka has around 66.000 Sq.KM.Bhutan's economy is much smaller than the tiny Western Indian state of Goa with 366 M of GDP while Bhutan's total GDP in dollars is around 300 M.Maldives with 200.000 of population has a economy smaller than a suburb of Delhi state.SAARC - Introduction
The 7 members to South Asian group of countries called SAARC (South Asian Association for Regional Cooperation - founded more than 9 years ago to promote harmony among these nations with a population base of close to 1.2 billion, share a common history, culture, heritage, ethnicity, languages, values, traditions and even life-style.
These nations with so much in common have had different religions and many more divisive factors which were further aggravated by economic disparities and regional conflicts - although not significant as they are mostly bi-lateral issues which have solutions.
Except some smaller areas - most of this geo-economic region was grabbed by British
in 19th century by trick and force as it had more than 600 small and big princely states.
Long before the British came to India, the Indian people had known harsh rule imposed upon them by invaders of the Indian sub-continent. The British rule compelled Indians to oppose strongly colonialism under any banner. India began to forge a neutralist position in the world affairs since 1947 - when British left.
The agriculture and industrial economy was placed in the service of England to supply raw materials to the British Mills who manufactured and re-exported as finished product.
On the other hand, India gained from England a high degree of competence in civil administration and a deep appreciation for the bulk of Western political thought.
Indian Neutralist doctrine made it virtual leader of the non-aligned nations.
India, however never claimed leadership of a new bloc of states, contending that two blocs were quite sufficient. As mistakenly quoted by analysts as soviet oriented - India's neutrality has earned it a global leadership of neutralist bloc - which has been, more than a bloc - a cohesive and unified group and most SAARC nations formed part of that bloc.
Deeply ingrained in the Indian mind are those cultural attributes of an ancient civilization which have done so much to orient South Asians specially Indian foreign policy toward neutralism in the pre and post-cold war world scenario.
The teachings of ancient India have contributed substantially to the non-violent and even compassionate approach to International relations - the beliefs of ancient Indian wisdom woven together with other philosophic teachings of Buddhists, Hindus and Sufi Islamic saints into the fabric of South Asian culture, incline the contemporary South Asia toward a compromising and pacifist outlook on world affairs.
Although an eastern state of India has a communist party govt but it is a reformed form of communism which professes foreign investment and a freer economy. Out of Nepal and Bhutan 2 monarchies in the Himalayas - Nepal has a democratically elected government of Communists who seems to be modifying the ideology to the local tastes.
Pakistan, Bangladesh, Sri Lanka and India have democratically elected governments
and all 4 of them are trying to reduce the extremist elements in the religiously oriented politics - which clearly have proved to retard their economic progress and must be toned down. Extremist religious elements are a threat to their socio-economic order and peace and once checked could bring about a sweeping change in the economic development in these locally affected areas.
The 2nd biggest common problem of this area is the hate among religious and ethnic groups which is one of the biggest headaches for the governments. Unfortunately
the 4 governments have not used any effective strategy to resolve this issue as this is one of the major reasons of conflicts.
Pakistan has been the unique force which has not shown tremendous enthusiasm so far in becoming part of this common market SAPTA - is still to define a clear road to modernism and friendlier relations with its immediate neighbors as it has tried to make a common market with Central Asian republics and Turkey but that could take atleast 5 to 8 years before it means some business as Central Asian republics are still in a kind of gestation period before they could even become emerging market economies.
Bangladesh has tried to form an alliance with Islamic nations of ASEAN but the economic realities of these countries don't encourage them to form a common market of substance.
India has come up with an idea of forming an Indian Ocean common economic bloc
including Eastern African nations like Kenya, South Africa, Australia and several other nations are Oman and Singapore and Mauritius, which eventually may become a reality with possibly including many of the SAARC nations.
Traditionally most of these nations of South Asia have been having lots of complexes about India - but India has shed its image of ideological neutrality in the economic matters and it has started moving towards unprecedented economic success. These nations have reduced significant antagonism towards its big neighbour in last 2 years and they are eager to participate in the great economic revolution undergoing in post-economic reform India.
In coming short term, Pakistan will have to change its priorities and change its aggressive stand to a more moderate and business friendly image as it has to fight with its biggest enemy - which is not India but internal issues like surmounting ethnic conflicts,aggravating economic disparities, massive reorganization of its abandoned social institutions, massive allocation of resources to education and basic infra-structure - which are the only priority and solution left to that country to avoid an evitable great socio-economic chaos of gigantic proportions.
Pakistan will be one of the biggest beneficiaries of the proposed Common Market as it does have a large under-developed potential of growth.
When ASEAN was originally established there was considerable suspicion between the member states but were put aside for economic purposes and today they are not only a success story but they have some of the friendliest bilateral relations with each other.
The success of EEC, ASEAN and recently of Mercosur of 4 South American Nations
proves that if all parties have common vision and understanding they can bring about a change which their people are waiting for decades.
The enmity and suspicion between Pakistan and India must be ended as this is one of the biggest obstacle to the great economic growth of this area of the world.
Pakistan compares itself with India and treats it as an enemy nation but in economic terms
Pakistan's economic system is less than 15% of India's size and India doesn't seem to be have any intentions to annex any territorry of other nations.
India and Pakistan both must offer a security agreement between each other to settle all issues of
in-securities once and for all and their love-hate relationship will change the economic scenario of the world as they will work together to fight economic disparities of one of the most populous regions of the world.
The economic parameters of this new economic bloc are very disparate.
For example total imports % of the GDP - Sri Lanka's imports form 34% of GDP,
Pakistan, Bangladesh and Nepal around 17 %, and India 8 %.
Tax revenues % of GDP Sri Lanka has 19 % , Pakistan 14% and India around 12%
with Nepal , Bangladesh and Bhutan around 8%.
SAARC nations have the 2nd largest railway network of the world after the US with total 92,456 Kms which is larger than combined tracks of France, Italy, United Kingdom and Spain.
SAARC nations have the largest irrigated land areas in the world with over 67 million
hectares (67,092.000 Hectares) , China coming second and the US in the third place.
In spite of way behind in literacy rate, with Nepal, Pakistan and Bangladesh only having
190 million illiterates- SAARC nations offer one of the largest English Speaking
scientific and technical personnel - India leading the way having the 2nd largest pool of the world alone after the USA.
SAARC nations together have a labor force of 423.3 million which is the largest of any other economic bloc in the world.
SAARC also is home to some of the poorest living people on the earth but a great pool of foreign aid, cooperative schemes in India and Nepal, successful micro-banking loan schemes for poor in Bangladesh, Military involvement in Industrial development in Pakistan, Increased job opportunities and self-employment schemes in all nations
are contributing to eradicate the most poverty stricken brackets with great success.
The total foreign aid to the area in 1991 was 6,9 billion dollars with Maldives topping the list having 140 $ foreign aid per capita (FAPC) and India the lowest with only 3.2 $ aid per capita.
Sri Lanka 47.2 $ , Bhutan 43.8 $, Bangladesh 14.6 $ and Pakistan 10.66 $ foreign aid per capita.
Bhutan's 25.4 % of GNP is based on foreign aid with the lowest in India where the foreign aid is only 1 % of the total GNP.
Maldives 28% , Nepal 13.6%, Sri Lanka 9% , Bangladesh 7% and Pakistan has 2.7% of its GNP based on foreign aid.
Hopefully with new enthusiasm in the markets and shifting economies on combined scale
will reduce the dependence of their GNP in coming years.
An increased collaboration and harmonious relationship could help reduce the defense budgets to much lower points - and once these funds are allocated for developmental
programs - the growth indicators will sharply move forward.
Being so close culturally , marketing plans for these countries can be more or less unique and specially for consumer products and services like entertainment they have more harmony than even ASEAN and EEC.
Having a combined average growth rate of more than 7% by year 2000 SAARC nations will have a combined population of 1.3 billion and the total consumer base will surpass 750 million - which will be the largest number of consumers in a single economic bloc.
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REAL TERMS OF GDP IN SOUTH ASIA:
By official accounts - the total GDP of SAARC is $380.21 Billion but in real terms - including the parallel economy and never accounted service sector - which is around 135% of the real official figures - the GDP comes to 894.1 billion dollars in 1994 based on 7% real-time average growth rate.
The taxation is one of the most dreadful themes in South Asia -where except salaried personnel - only 6% to 10% people pay appropriate income taxes. The Research shows that South Asian people
have historically avoided taxes as prior to British - various foreign rulers forced taxes on the majority Hindu populace (called Zazia) which was an indirect way to de-humanize and colonize them ( this practice caused , as per historians, mass conversions to Islam in India. British used to impose heavy taxes on already impoverished farmers which still make the Collector's figure as a dreadful one.
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