Enhancing economic integration in south Asia: Issues and prospects for closer monetary cooperation

Sisira Jayasuriya, Nephil Matangi Maskay

Research output: Contribution to journalArticleResearchpeer-review

2 Citations (Scopus)

Abstract

Though SAARC has the stated goal of an economic union and a common currency, after a quarter of a century, these remain distant goals as political tensions between India and Pakistan have hindered any real progress on a regional scale. Barriers to trade and factor mobility are high in the region as a whole, though considerable liberalisation has been achieved through various bilateral agreements involving India and some of its neighbours. The conventional economic conditions for a common currency are also currently absent as patterns of shocks are non-synchronised, trade links are weak and factor mobility much constrained. Deeper intraregional economic integration requires much more comprehensive trade and investment liberalisation among member nations. While the political conditions for a single currency are unlikely to emerge in the foreseeable future, steps towards closer monetary cooperation through a South Asian Monetary System building on the existing SAARCFINANCE network may provide an institutional framework for enhancing regional integration. However, such cooperation will have to be conceived as a component of a sustainable transitional strategy which commits to a serious programme of deeper trade liberalisation to facilitate greater integration with the rest of the world, and most importantly, with East Asia.

Original languageEnglish
Pages (from-to)185-206
Number of pages22
JournalSingapore Economic Review
Volume55
Issue number1
DOIs
Publication statusPublished - Mar 2010
Externally publishedYes

Keywords

  • Economic integration
  • Monetary integration
  • Monetary system
  • South Asia

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