FAISALABAD (August 21 2008): The Asian Development Bank is actively considering to launch a study for "South Asian Regional Co-operation in 2030", to review the potential role of India and Pakistan and identify long-term domestic challenges or constraints that are likely to hinder meaningful Regional Co-operation and Integration (RCI).
Sources in the ADB hoped that it would help understand what the economic, social, and political landscape of each country may look like in 2030, and determine how bilateral and regional relationships might evolve into the future.
The sectors and issues that need to be examined would include, but not be limited to: domestic infrastructure gaps and bottlenecks; human capital and workforce skills requirements; and the general domestic business environment and investment climate, especially policy relating to foreign direct investment (FDI). This work will build upon the various relevant TA projects that have already been completed by the regional departments concerned.
Mapping out the most efficient and beneficial way of timing and sequencing domestic policy reforms to address long-term challenges and support RCI, said ADB sources. According to ADB update study reports, South Asian countries have already started pursuing reforms that would put in place some of the domestic policies, institutions, and capabilities required to pursue successful RCI, but there is an urgent need to step up and expand the reform process.
At the same time, there is a need to closely consider the timing, sequencing, and co-ordination of reforms, as these will have implications for policy priorities, and on the choice and design of institution- and capacity-building strategies.
Identifying long-term, strategic measures that could maximise gains from domestic policy reforms. This strategic orientation is meant to increase the utility of the studies by providing a framework for incorporating reforms in national development plans. These studies are expected to inform the regular revision and updating of ADB's South Asia regional co-operation strategies, South Asia Sub-regional Economic Cooperation, and Central Asia Regional Economic Cooperation programs, ADB sources hoped.
The study will commence with a literature review that summarises work already completed on related topics, to ensure that the Reta complements rather than duplicates the existing knowledge base. The review would examine, for example, studies that have been completed from a domestic perspective as well as those taking a regional or interregional view.
Apart from ensuring that the study adds value, the literature review will also form an important input to a "South Asia 2030" background and context issues paper, which will build on ADB's existing RCI strategy, South Asia RCSP, and the outputs of previous TA projects.
The literature review and background and context issues paper will be presented at a preparatory workshop to be held at ADB headquarters. Work on the "India 2030" study will commence thereafter. The "Pakistan 2030" study will be informed by the work on India. The studies will be published in English; if necessary, the possibility of translating these into local languages will be explored. In addition, national workshops in participating countries and an international conference at ADB headquarters will be organised.
To promote dialogues on policy issues related to regional co-operation, representation from both countries at the workshops and participation in the international conference will be encouraged. While the countries' top political and economic leadership will be the main audience, each country study is also expected to be of major interest to the domestic and international business community as well as international development partners.
In an update study report, J. W. Lee, leader of the team of ADB, Office of Regional Economic Integration (OREI) said that this study has adopted a country focus for several reasons. First, many of the policy and institutional prerequisites for and obstacles to regional co-operation in South Asia will require substantial reforms at the national level.
A host of domestic issues and challenges identified in country strategy papers, particularly at the sectoral level, are linked to regional co-operation and integration (RCI). Many of these issues are likewise identified in the Asian Development Bank's Regional Co-operation Strategy and Program (RCSP) for South Asia (2006-08).
secondly, it is widely acknowledged that the pace, direction, and extent of regional co-operation in South Asia are largely influenced by the actions of India and Pakistan, the region's two largest economies-hence the focus on these countries. Both countries have been taking steps to promote increased RCI, but there is a need to support this agenda by identifying domestic reforms that would support and accelerate the process.
Finally, a country focus is warranted due to the absence of any external catalyst promoting RCI. For example, in Southeast Asia the Asian financial crisis and the emergence of the People's Republic of China as an economic powerhouse galvanised the process of regional integration. In South Asia, the catalyst for increased interregional co-operation and integration (ICI) has so far been generated internally-led by India and Pakistan-rather than externally.
South Asian RCI may receive an indirect boost as India and Pakistan pursue greater trade and investment links with East Asia and Southeast Asia through increased triangular trade and investment.
The process of intra-regional production network-based specialisation, which underlies regional integration and drove the process of increasing regional co-operation in Southeast Asia, could also occur in South Asia through ICI. However, the extent to which country-led ICI initiatives could be used as a catalyst will be constrained by domestic policy choices and reform measures; this further underscores the importance of adopting a country focus.
