Regional Integration in Services in South Asia
| Author | Anil Kumar Kanungo |
| Date | 01 April 2018 |
| DOI | 10.1177/0020881718790891 |
| Published date | 01 April 2018 |
| Subject Matter | Articles |
Regional Integration
in Services in South
Asia: Opportunities and
Constraints
Anil Kumar Kanungo1
Abstract
Regional integration in South Asia remains a distant priority for South Asian
Association for Regional Cooperation countries. In the area of services, this
region offers a great potential. This article aims to examine the opportunities that
exist in services and analyses the constraints that impede regional integration in
services in South Asia. It highlights the gamut of scope and benefits that can be
accrued from this regional integration in services provided certain constraints
such as regulatory, infrastructural, institutional and business-related constraints
are addressed adequately. The article argues that the region throws up several
political and economic challenges which merit immediate attention to further the
cause of integration of services. It identifies intraregional mobility, trade facili-
tation and investment opportunities as the key drivers of regional integration.
Sectors such as tourism and health care have huge potential. Intervention from
governments of all member countries in specific sectors like tourism is crucial
to realize the goal. The article argues for an open, broad-based, flexible regional
services agreement, which takes a liberal approach to services integration. It is
important that regulatory harmonization, liberal investment policies, willingness
towards free movement of natural persons and political will of high order are
encouraged to seek such integration in services.
Keywords
South Asia, services, integration, liberalization, regulation
Article
International Studies
55(2) 167–193
2018 Jawaharlal Nehru University
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0020881718790891
http://journals.sagepub.com/home/isq
1 Professor, Department of Economics, Lal Bahadur Shastri Institute of Management (LBSIM), New
Delhi, India.
Corresponding author:
Anil Kumar Kanungo, Plot No. 11/7, Sector-11, Dwarka, New Delhi-110075, India.
E-mail: anilkanungo@hotmail.com
168 International Studies 55(2)
Introduction
South Asia is one of the most politically volatile and economically and histori-
cally underdeveloped regions in the world. It is home to a variety of countries
having different per capita income, macro-economic performance, economic
vulnerability index and human development index. Eight South Asian countries,
namely Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and
Sri Lanka, occupy more than one-fifth of the world’s population including half of
this planet’s poor.
Bedeviled with so many socio-economic depravities, this region, however,
during last couple of years has emerged as one of the fastest-growing regions in
Asia. Latest trends in South Asia demonstrate its economic performance quite
resilient in the presence of volatile global financial markets. Real GDP growth in
the region is likely to remain above 7 per cent in 2016 and 2017.1
South Asia exudes similar confidence in trade in services as much it does in
trade in goods. As economy is moving towards more value-added services (India’s
service sector’s contribution to its GDP is around 59%), demand for services is
rising in the economy. This is evident in regional integration in South Asia which
holds considerable potential across many service sectors in South Asia (Chanda,
2015). The value of commercial services of trade in 2015 in world economy is
nearly twice as high as in 2005.2 In 2005 world commercial trade in services reg-
istered about US$2,000 billion and went up to register around US$3,900 billion in
2015. In total, developing economies registered about 52 per cent, whereas devel-
oped economies secured around 43 per cent of world’s total commercial trade in
services in 2015.3
All this data suggest considerable potential in terms of trade in services in
South Asia, which is overwhelmingly powered by India. But in reality, the region
fails to realize its true potential for a variety of reasons. It could be because of lack
of political initiative, or may be the right mix of policies and strategies is missing.
It could be due to some constraints like regulatory, infrastructural, institutional,
cultural and business environment-related constraints which are playing a major
role in impeding such potential and restricting the region from attending service
integration.
It is in this context, the article aims to examine the scope behind such regional
integration in services; whether complementary trade and economic policies
have been designed to realize regional integration of services in South Asia.
It tries to explore the regulatory challenges existing among member countries of
South Asia that undermines the integration process. Since the region has a diver-
sity of political culture, social values and economic considerations, are political
and economic challenges then create serious impediments to foster regional
integration in services?
The article is divided into many sections to deal each issue mentioned above
separately. The introduction is covered in the first section. The second section
provides an overview of the service sector in South Asian countries. The next sec-
tion provides an analysis of services integration through ‘offers’ and ‘request’
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