Jijodamandu, a small hilltop village in Doti district in Western Nepal is a full day’s walk from the nearest motorable road. Below the village, the hillside is littered by terraced paddy fields producing rice. Surrounding many homes in the village slightly above the terraced paddy fields, there are fruits trees planted sporadically – oranges, lemons and pomegranates. When I was leaving the village after a few days stay, my host handed me a bag of oranges. Not wanting to overreach his hospitality towards me and also knowing food security is a concern for them I initially declined his offer. But he was insistent. “For the walk back down,” he said. “Fruits we have plenty of. It is rice and grains we cannot plant enough.”
South Asia’s Commerce Ministers meet in Thimphu on July 24. Getting there would not have been easy for many of them, with no direct flights between Thimphu and four of the seven capitals. In June, when some of us convened for a regional meeting in Kathmandu, our Pakistani colleagues had to take a 20 hour flight from Karachi to Dubai in order to get to Kathmandu! This is symptomatic of the overall state of economic engagement within South Asia—in trade in goods and services, foreign direct investment and tourism.
South Asian countries’ trade policies remain inward-looking compared to other regions, and there are even bigger barriers to trade within the region. Today, South Asia today is less economically integrated than it was 50 years ago. Figure 1 below shows that intra-regional trade in South Asia accounts for less than 5 percent of total trade, lower than any other region.