Visit for more details : http://www.summit.sdpi.org

 

Concept

Note

The

overarching theme of the Fifth South Asian Economic Summit (SAES-V) is “Making

Growth Inclusive and Sustainable in South Asia”. SAES-V is focused on framing

observations and recommendations for the 18th SAARC Meeting of Prime Ministers

to be held in Nepal. SAES was launched in 2008 with the objective of bringing

together leading academics, practitioners of public policy, members of the

business community and related stakeholders to discuss a regional approach to

issues of mutual concern and also to learn from home grown solutions to common

predicaments that can be replicated elsewhere in South Asia. This year’s SAES

seeks to involve politicians and civil-servants from member countries alongside

professional experts already involved in Track-I / Track-II level of South

Asian development agenda. This year the secretariat for organizing SAES-V is

SDPI, which is the oldest civil society think tank in Pakistan. For organizing

this Summit in Islamabad-Pakistan, SDPI has partnered with co-organizers across

South Asia which include Institute of Policy Studies (Sri Lanka), Research and

Information System for Developing Countries (India), South Asia Watch on Trade,

Economics and Environment (Nepal), and Center for Policy Dialogue (Dhaka).

Dates to Remember:

Submission

of Abstracts: 25 April 2012

Submission

of documents by Indian passport holders: 11 June 2012

Submission

of Conference papers: 13 August 2012

Submission

of Power Point Presentations: 28 August 2012

Fifth

South Asian Economic Summit: 11-13 September 2012

At

the time of writing of this concept note four key developments are taking place

on the global front. First we are being reminded that the effects of global

financial crisis are here to stay for a little longer. This has been validated

by the Euro zone crisis that has already started to impact South Asia. Second

is 17th Conference of the Parties of the United Nations Framework Convention on

Climate Change held at Durban which is now being vowed as an important step

towards combating global climate change. The third development is regional in

nature carrying significant importance for South Asia’s future. The 17th Summit

of the heads of South Asian Association for Regional Cooperation (SAARC) was held

in Maldives and witnessed signing of some important agreements between member

states. Finally and most concerning of all that economic growth in the South

Asian region has been projected to decline at least for the next two quarters.

We briefly discuss these four developments below in order to set in sequence

the priorities for the next South Asia Economic Summit.

 

The

origins of the Euro zone crisis were varied for the member countries. All sort

of problems collided to make a plethora of challenges for the governments – who

now had to deal with toxic financial assets, ballooning budget deficits and

restructuring of debt. But going forward some key challenges remain, for

example how to rebalance demand within a single currency block? A question

which has forced economic managers to rethink how member countries should be

selected to form a currency union. Whatever the current state of crisis it has

certainly started to impact the South Asian economies. India and Bangladesh

have officially reported the status on cancelled export orders. Pakistan is

fearing that migrant workers in EU may be laid off in big numbers which in turn

may result in a decline in future remittance inflows. Afghanistan has indicated

that aid flows from EU may be slashed on account of already high budget

deficits being faced by leading member states including France, Italy, and

Spain.

The

global financial crisis had put the climate change agenda on the backburner due

to the developed countries envisaging a downward pressure on (restoration of)

economic growth in case climate change commitments were observed. The

restructuring of economy into a low carbon mode will imply reduction of output

and employment growth in agriculture sub-sectors such as crops, forestry and

may be livestock. The Durban talks however led to an important intellectual

breakthrough towards resurrecting the climate change negotiations. The Durban

Platform for Enhanced Action aims at bringing all greenhouse-gas emitting

countries under a common legal regime by 2015. This legal understanding will

bind these countries to cut emissions by 2020. A group has been put in place to

provide proposals on the financing of Global Climate Fund that is planned to

provide $100 billion annually by 2020 to poor countries. Some decisions were

also taken with regards to the manner in which carbon offsets should be

allocated under the Clean Development Mechanism to carbon capture and storage

projects. Finally in the interest of capacity building of developing countries

a Climate Technology Center and Network will be established which will ensure

systematic transfer of technology.

There

have been interesting developments at the regional front during the past few

months. The 17th SAARC Summit held in Maldives ended on an upbeat note. Several

agreements were signed which included the SAARC agreement on Rapid Response to

Natural Disasters, the SAARC agreement on Multilateral Arrangement on

Recognition of Conformity Assessment, the SAARC Seed Bank Agreement and the

SAARC Agreement on Implementation of Regional Standards.

A

strong resolve was exhibited to continue efforts towards finalizing framework

for improving connectivity through rail and sea which will ultimately also

result in a regional railways agreement. It was decided that by the end of next

year formalization of Indian Ocean Cargo, Motor Vehicle agreement and Passenger

Ferry Service will also be completed. A demo run of a Bangladesh-India-Nepal

container train will soon be initiated. Increased interest was indicated

towards inter-governmental agreement for energy cooperation and regional power

exchange.

While

the usual emphasis on the implementation of South Asian Free Trade Area (SAFTA)

was reiterated, it was highlighted that there are significant barriers to

intra-regional trade which are hurting producers as well as consumers in the

region. A focused effort is required to slash the number of items under

sensitive lists, harmonize standards and customs processes, and eliminate

non-tariff barriers.

In

view of the above mentioned two largest countries in the SAARC region came

forward with positive steps in order to prove their seriousness towards the

regional cooperation agenda. Pakistan announced that it was ready to provide

most favored nation status to India and will also reduce its sensitive list by

20 percent and allow tariff concessions on further 233 items under SAFTA by

February 2012. India also announced that its sensitive list for LDCs will now

be limited to 25 items.

Going

forward the key challenge faced by several South Asian economies will be to

restore and sustain economic growth and put it on an inclusive path. In the

wake of Euro zone crisis, international and national projections indicate a

downward pressure on growth in SAARC member countries. In India the high

interest rates which were maintained to tame inflation have resulted in

discouraging investment and have particularly hurt the performance of

industrial sector. The Indian economy is exposed to the troubles facing

European financial sector which in turn has also put the Indian currency under

pressure.

In

case of Bangladesh growth in the real sector has been cradled through market

access to readymade garments and rising inflow of remittances. However growth

in foreign direct investment, move towards value addition in exports and

diversification in overall structure of growth has been slow to come by due to

issues related to security, governance, tax structure and vulnerability to

natural disasters. These factors threaten the sustainability of growth in the

longer term and will also pose challenges to policy objectives related to

poverty and inequality improvements.

A

similar story in Pakistan suggests that growth will remain depressed on account

of energy crisis facing the industrial sector. Furthermore the negative

repercussions of war on terror are thought to keep foreign and domestic

investment growth at low levels. The country has benefitted on account of

remittances and rising export prices – a trend which is forecasted to saturate

in the coming days. To add to these difficulties the country has been facing

floods on recurrent basis which have caused loss of agricultural activity and

displacement of substantial number of people in Punjab and Sindh.

Finally

most of these economies are dependent on proceeds from Diaspora, bilateral

inflows of foreign assistance, export receipts from commodity based items – all

of which are prone to volatility in the wake of Euro zone crisis, lack of

consensus on global initiatives on trade, investment and climate change, war on

terror, and increased political instability in several SAARC member countries.

These and other issues that arise from decades-old political differences in

this region require a collective solution. There has never been a more

important time to consider a regional approach towards common objectives of

inclusive and sustainable growth which can in amalgam with micro-level

interventions lead to welfare improvement for the people of South Asia.

Visit for more details : http://www.summit.sdpi.org

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