Economic integration in SA
Thursday, January 14, 2016 – The twentieth century witnessed two of the bloodiest wars ever fought in the history of mankind; the First World War and the Second World War. The epicentre of both the wars was Europe, where countless lives were lost, infrastructure destroyed and many people became victim of the Jewish holocaust. The region also became entangled in the post-war Cold War conflict between the United States and the Soviet Union, resulting in many proxy wars, military coups and foreign sponsored revolutions. However, the region has integrated itself into one of the most economically integrated regions of the world, known as the European Union. Some of the salient features of this Union are free trade, a common currency and a single visa policy for all the member countries. It is quite astonishing that a region once engulfed in severe hatred, has now quite soundly integrated itself. This is a lesson for all other regions of the world, which are struggling towards integrating themselves due to political reasons.
A region which can learn from the European Union is South Asia. The region has witnessed many political downturns, such as the bloody partition of South Asia into Pakistan and India, the secession of East Pakistan from Pakistan, the three wars fought between India and Pakistan and not to mention the cross-border skirmishes between the two countries. All countries in this region blame the political tensions between Pakistan and India to be a major hurdle towards economic integration in South Asia, which is quite true as relations between the two countries have remained strained for a period of time. But the question arises, how did Europe managed to set aside all its differences and integrate? If Europe can do it, why can’t we?
Even though trade is taking place in the region, however, there are many difficulties faced by traders in cross-country trade due to the lack of integration. Due to poor infrastructure, such as bad roads, goods are not transported on time. The bureaucratic red-tapism is very high in the Customs departments and in the acquisition of Visas in all the countries, which is very time-consuming and also costly due to bribes given to government officials. Moreover, the trade policies are quite volatile, with no consistency in them. Due to these factors, the costs of trade in South Asia are almost 85% higher than the costs of trading in East Asia.
The potential of trade is very high in the region, particularly in agricultural products, such as tea, rice, wheat, cotton and many other fruits and vegetables. Free trade and economic integration in region could thus lead to economic prosperity of the people in the region and might also lead to an ease in political tensions between countries. A European Union model might be a utopia as for now, but still even if trade policies are relaxed and trade is kept separate from politics, it could be advantageous for whole region.
The people-to- people contact is very strong in South Asia, for instance majority of the people who travel to India, Pakistan or Bangladesh always talk about the hospitality they receive and also express the need to end the political tensions between countries. It is high time that countries in South Asia focus their attention on trade, so that the potential of the whole region is realized. If Europe can give trade a chance, despite, its past racial and ethnic tensions, then so can South Asia.
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The opinions expressed in this article are the author's own and do not necessarily reflect the viewpoint or stance of SDPI.