Exploring Pakistan’s Regional Economic Cooperation Potential ( The Presidential Address)

A. R. Kemal

Abstract


Free trade benefits are not well-harnessed despite the WTO
because of the regional groupings. Such groupings have, in fact,
resulted in a chaos. Pakistan has been a member of the SAARC and the
ECO. In both the groups, intra-regional trade accounts for only four
percent of total trade. The present study briefly reviews and identifies
constraints to intra-regional trade and other modes of economic
cooperation in the region. The SAFTA agreement and the possibilities of
greater economic cooperation are also examined. Comparative advantage
and low trade complementarity are found to be the main impediments to
trade. Other obstacles such as limited capacity to generate exportable
surpluses, restrictive trade policies, and political problems have also
inhibited the growth of intra-regional trade. Higher trade levels can be
achieved through intra-industry trade, vertical specialisation, joint
export marketing of competing regional export products, deepening trade
liberalisation, promoting monetary cooperation, and encouraging joint
industrial ventures. It is imperative for the success of SAFTA that the
negative list is kept quite small and the countries are prepared for
closure of a few industries. Thus the SAFTA has great potential and
South Asian countries should accept short-term costs for longrun
benefits. Expansion of trade as well as efficiency and improved quality
of exports would benefit the countries participating in the regional
co-operation effort.

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DOI: https://doi.org/10.30541/v43i4Ipp.313-334

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