As discussed in my last two entries, South Asia's Infrastructure Deficit and Integrating the two South Asias, regional cooperation can be a key instrument in meeting the development needs of South Asia. In this piece, I will discuss specific areas that will bring the most region-wide benefits in my view.
The three priority areas for regional cooperation include telecoms and internet, energy, and transport. A regional telecom network and a high-bandwidth, high-speed internet-based network could help improve education, innovation, and health. A regional network would facilitate better flow of ideas, technology, investments, goods and services. It would facilitate greater interactions between knowledge workers in areas such as high-energy physics, nanotechnology, and medical research. There are untapped positive synergies at the regional level that would come from information sharing and competition in ideas among universities, non-university research and teaching entities, libraries, hospitals, and other knowledge institutions.
It also could help in the building and sharing of regional databases, and in addressing regional problems, including multi-country initiatives such as flood control, disaster management, climate change, and infectious disease control. Importantly, such an effort could help spark higher and more sustainable regional growth. Regional cooperation in telecoms and the internet could strengthen the competitiveness of South Asia in the services-export sector. India has established itself as a global player in ICT and outsourcing. Other countries in South Asia could potentially benefit from neighborhood and spillover effects. The expansion of services exports would contribute to growth, create jobs, and other sectors would benefit from improved technology and management.
The service-export sector, although less infrastructure intensive than manufacturing, needs different types of infrastructure than the traditional export sectors. For these exports, there would be a need to invest in fiber optic highways, broad band connectivity, and international gateways and uplink facilities. Investments in tertiary education, and in technical and English proficiency would need to be increased. South Asia would need to remove barriers to trade in ICT services, eliminate restrictions on the flow of intraregional FDI, and remove visa restrictions on the flow of people.
In addition, the potential gains from regional trade in energy are substantial. After decades of insignificant cross-country electricity trade and the absence of any trade in natural gas through pipelines, regional political leaders and businessmen have recently evinced a great deal of interest and enthusiasm in cross-border electricity and gas trade, not only within South Asia but also with its neighbors in the west (Central Asia and Iran) and in the east (Myanmar).
There are two regional energy clusters in South Asia. The Eastern market includes India, Bangladesh, Bhutan, Nepal, and Sri Lanka, extending to Myanmar, and the Western market includes Pakistan, Afghanistan and India, extending to Central Asia and Iran. India bridges the two clusters. While all countries would benefit from energy trade, in relative terms the gains would be especially large for Nepal, which could double its GDP if it could trade its hydro-power with India and Bangladesh.
High growth in South Asia cannot be sustained without better management of natural disasters and regional public goods. Benefits of regional cooperation in water and climate change would be immense in South Asia. From the Himalayas, where glacier melt is already changing water flows in ways that remain to be understood, to the coastal floodplains of Bangladesh and Pakistan, South Asian countries need to adapt to climate change. The melting of Himalayan glaciers leading to the disastrous prospect of reduced water availability in the South Asian rivers, the frequency of floods and cyclones, and the evidence of rising sea level have given South Asia a wake up call for collective action for managing climate change to reduce vulnerability and poverty over the longer-term. This can provide the much-needed trigger for opening a dialogue on regional water cooperation. Cross-border cooperation on water between among India, Bangladesh, and Nepal offers the only long-term solution to flood mitigation, and would benefit over 400 million people.
The benefits of cooperation are clear. For example, watershed management and storage on Ganges tributaries in Nepal could generate hydropower and irrigation benefits in Nepal and flood mitigation benefits in Nepal, India (Uttar Pradesh, Bihar) and Bangladesh; water storage in northeast India could provide hydropower and flood benefits in India and Bangladesh; and both would also provide increased and reliable dry season flows. There is an emerging and promising opportunity on the specific cooperation between India, Nepal, and Bangladesh on the Ganges. South Asia needs to strengthen regional governance institutions. This is vital for managing the provision of regional public goods, and management of common pool resources.
Regional cooperation initiatives could unlock the growth benefit of South Asia’s geography and people, consistent with improved management of regional public goods. Better regional cooperation can also contribute to reducing regional conflicts, which will remove an important long-term constraint to growth.
What other areas of cooperation do you think will be beneficial to South Asia's growth? What is holding this back?