The Challenging Political Economy of South Asia – Conclusion

Suggestions for Future Research

The findings of the current study highlighted a number of novel possibilities for potential exploration in researches. From the results of the study, the unexpected new finding requiring further research relates to the role that non-tariff barriers play in hampering intra-regional trade in South Asia. SAFTA envisions the elimination of any existing tariff barriers as articulated under the Trade Liberalization Program. However, concerns were raised about the potential role that non-tariff barriers could play in hindering trade flows, even in a situation where SAFTA is implemented fully. In this respect, there is a need for future studies to explore the effectiveness of SAFTA in increasing trade flows and meeting its objective of regional integration by modeling scenarios under which SAFTA can achieve optimum results. Potential scenarios that can be modeled include full implementation of SAFTA with the elimination of non-tariff barriers and full implementation of SAFTA with present non-tariff barriers. It can help in delineating the role of non-tariff barriers with respect to the achievement of the goals and objectives of SAFTA.

Another potential area for future research involves clarifying the trade creation and trade diversion effects of SAFTA. In this respect, there was no consensus as to whether SAFTA will result in trade creation or trade diversion effects. Thus, further research is needed to specifically determine if, and under what conditions, SAFTA will result in either trade creation or trade diversion. It is crucial in ascertaining the impact of SAFTA on fostering intra-region trade flows. Essentially, future research should determine the critical success factors for SAFTA, including factors that may hamper its effectiveness with respect to achieving its goals and objectives. Future research can use the empirical models in ascertaining whether SAFTA results in trade creation or trade diversion.

The current study was mainly qualitative in nature and was based on expert interviews. To this end, there are some inherent limitations associated with the qualitative nature of the research, including subjectivity, the small sample size used, and difficulties with regard to making systematic comparisons. Future research can use a different methodological approach in investigating the issue explored in the study – the potential and role of SAFTA in increasing trade flows. It can involve the use of quantitative empirical approaches that use trade flow data to develop an empirical model that can be used in determining the impact that SAFTA will have in trade flows between South Asian countries. Future studies can embark on quantifying aspects, such as market integration, using measures like a cross-border flow of capital, goods and services, and trade relationships among others. In other words, the current study can be used in forming a conceptual model that can be used in exploring the effects of SAFTA on trade flows. Therefore, current research can be considered the first qualitative phase of research for building a conceptual model to be evaluated using quantitative research methodologies in the second phase.

Summary of the Study and Conclusions

The purpose of such qualitative research was to examine the challenging political economy of South Asia. Specifically, the study sought to explore the potential and role of SAFTA in increasing trade flows between countries in the South Asian region.

From the literature review, it is evident that there have been several attempts to create regional cooperation arrangements in South Asia, with SAARC being the most successful attempt. Nevertheless, SAARC has been dismissed as ineffective. It is attributed to the fact that recent observations of SARC meetings indicate unending disagreements that reduce the chances of regional integration (Aggarwal & Urata, 2013; Brenton, 2003). In addition, the review of literature showed that suspicion and distrust among South Asian countries hamper the possibility of achieving regional integration and economic cooperation via agreements, such as SAARC, SAPTA and SAFTA. Other factors hampering regional integration efforts in the region that have been mentioned in literature include political uncertainties and putting primacy on economic interests, security issues, and intra-regional conflicts. Security issues relate to the political conflicts witnessed between countries of South Asia (Dorussen, Murshed, & Ward, 2011). Historical differences relate to the perennial intra-state and intra-region conflicts, whereas instability related to the political issues observed in the region. Based on the review of literature, it was evident that the future of economic integration in South Asia is uncertain, given the ineffective performance of SAARC and SAFTA (Francois, Rana, & Wignaraja, 2009; Secretariat, 2014). Therefore, it was expected that even under SAFTA, achieving regional integration in South Asia would be a challenging task.

The information from the literature review was incorporated into the findings of the current study in order to create a refined understanding of the research problem. It was done by the use of comparisons of the findings relating to current study in terms of themes and patterns shared by the literature and study, themes novel to the study, and themes contradicting literature. As regards the potential and role of SAFTA in increasing trade flows, themes shared by literature and the study included SAFTA opportunities for market integration and the possibility of SAFTA to bolster trade agreements. A number of subthemes were also identified in the research. They dealt with SAFTA and the way it increases opportunities for market integration, which include bolstering regional cooperation and regional connectivity. With respect to the theme, SAFTA offers an opportunity to increase trade agreements. It was found that SAFTA will be crucial in achieving trade liberalization and helping in advancing the commitment of South Asian countries towards achieving regional integration. Regarding the possibility of regional integration in South Asia, the themes shared by the study and the literature included security issues, historical differences and instability, and challenges to achieving regional integration in South Asia. The challenges, which may be faced in the region, included geographic dependency, lack of comparative advantage in the region, lack of common threat, protectionism, strained Pakistan-India relations, and perennial intra-region and intra-state conflicts. Themes contradicting literature were also identified in the study. They included the fact that South Asian countries have more political will to achieve economic integration, and SAFTA will result in trade diversion. Moreover, it will play a crucial role in deepening the economic integration in South Asia and reinforcing incentives aimed at resolving the political conflicts that exist between the countries in the region. It is imperative to note that the majority of experts were optimistic about the success of SAFTA in achieving economic integration in the region.

Consequently, the findings of the study suggest that SAFTA has the potential of enhancing economic integration and increasing trade flows in the region. However, to achieve it, challenges affecting the region must be first addressed in order to create an environment where SAFTA can function effectively. The challenges identified that must be addressed include the lack of comparative advantage in the region, as well as a common threat, protectionism, strained Pakistan-India relations, and perennial intra-region and intra-state conflicts. All of the above-mentioned factors have been identified in the literature as negatively influencing the political will of South Asian countries and preventing them from uniting and working together towards regional integration.

Implications

The findings of current research have important implications for leaders of the South Asian region seeking to foster regional and economic integration and increase trade flows between the countries. The findings suggest that SAFTA can effectively enhance economic integration in the region. Therefore, leaders of South Asia countries must exhibit political will and commitment towards the implementation of trade liberalization provisions outlined in SAFTA. There is no doubt that South Asia is the least integrated region, which implies that SAFTA has facilitated the fostering of integration and subsequently increasing trade flows (Brenton, 2003). Thus, the findings of the study can be used in providing justification for greater commitment towards implementing provisions specified under SAFTA. In addition, the findings suggest that commitment towards full implementation of SAFTA provisions is not enough. The leaders should also show commitment and will to address the problems facing the region, such as instability, intra-region conflicts, intra-state conflicts, and security threats. Such challenges can render SAFTA ineffective even in a scenario where SAFTA is implemented fully based on open trade policies.