The Financial Express

Challenges South Asia faces

| Updated: October 24, 2017 04:26:11

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Challenges South Asia faces

South Asia, the most populous and the poorest region on earth, has been struggling for economic development for decades. Over the past decades, there were a lot of improvements on socio-economic front. But admittedly, the kind of politics that is required to emancipate people from the clutches of backwardness, both at country and regional level, is still missing. That is why regional integration is suffering a lot.  
The region is faced with newer challenges following twists and turns of global events, mostly in America and Europe. As most of the countries of this region rely on high doses of aid from and trade with these countries, any shock there could jeopardise development efforts in this part of the world. Unfortunately, however, there have been little discussions on upcoming newer challenges. It is at this juncture that the Monash University of Australia has thought it wise to initiate some brain-storming sessions on South Asia's key challenges. The South Asia Research Network of the Monash University recently organised an international conference on 'Human Capital, Food Security and Economic Development in South Asia'. Jointly organised with the Institute of Policy Studies (IPS, Sri Lanka) and the Centre for Development Economics and Sustainability (CDES),  a policy round table was held on 'Development Challenges in South Asia'.  Chaired by Saman Kelegama, Executive Director of  IPS, the panel comprised  Professor Wahiduddin Mahmud (Bangladesh), Ramesh Chand (India), Sarath Rajapatirna (Sri Lanka) and Waqar Ahmed (Pakistan). 
Eminent economist Wahiduddin Mahmud emphasised the role of a link between research and policy in coming years with an eye on long-term issues. This point was also later raised by Mr Sarath Rajapatirna lamenting on the lack of a link between researchers and policymakers. He pointed out the need of a lot of policy changes by removing the dis-connect between research and governments. He advocated that governments should be informed by research or evidence-based research. 
Mr Wahiduddin Mahmud also argued that the existing relation between education system and human capital formation is albeit dichotomous and looming large as a challenge in the coming years. Faced with resource constraint, the choice is whether to go for basic or elitist education. The experience of South Korea that he drew upon, shows that manufacturing growth served as the linchpin while Indian experience shows service sector development as the beacon. India took advantage of new high-tech information revolution possibly indicating the possibility of a more service sector-led growth with a chance to produce too much inequality or 'Dutch disease'. In Bangladesh, however, the million-dollar question is: can we take advantage of both higher education and new high-tech service sector without sacrificing quality of workforce?
Mr Ramesh Chand postulated the challenge in terms of maintaining the growth momentum given the brewing depression all over the world - European Union in disarray and some countries faced with slow growth rate. Rise in protectionism in the US could force upon a reconfiguration of the production basket. The challenge is also how to move from jobless growth to job-led growth as, in some countries, growth rate accelerated but jobs could not be created to that extent. Thus it is not surprising that unless jobs are created in massive numbers, demographic dividend could turn as demographic disaster (as in Indian Punjab). Again, unless education system is changed with a changing mindset of ensuring skill development, the looming challenge may not be faced. With rise in income in this region, meeting demand for energy could be a challenge which could partially be faced with trans-border trade of energy. 
The challenge of governance and sustaining growth momentum with competitiveness was highlighted by Mr Waqar Ahmed. At regional level, he argued for formalisation of informal trade, trade-led investment and women entrepreneurship.  
By and large, the round table was of the opinion that in the wake of upcoming challenges, regional integration needs to be deepened. There should be a scope for learning from the experiences of neighbouring  countries. As Mr Wahiduddin Mahmud put it, Bangladesh has become a new star in social indicators by a successful social campaign for innovative low-cost delivery of services backed by NGOs (BRAC). Much of the problems arising out of the global conundrum should be tackled by more cordial cooperation among South Asian countries although, unfortunately, the history of SAARC in meeting the aspirations of the people of the region was not satisfactory. Faced with a huge scarcity of financial resources with dwindling aid from donors, countries of this region should embark upon raising tax/GDP ratio and increase inter-regional trade to meet revenue shortfalls. In fact, increased trade and investment among countries of this region could go a long way in helping meet the challenges. 
 Mr Saman Kelegama observed that South Asia has high potential which is not properly exploited.  He lamented the low share of South Asia in global trade (2-3 per cent) and put up a case for trade-led investment. He thought reaping home demographic dividend is an acute challenge in South Asia.
The writer is a former Professor of Economics at Jahangirnagar University and currently Chair, Department tof Economics 
and Social Science (ESS)
 BRAC University. [email protected]/
[email protected]

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