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Enhancing Economic Integration In South Asia: Issues And Prospects For Closer Monetary Cooperation

Author

Listed:
  • SISIRA JAYASURIYA

    (La Trobe University, Melbourne, Australia)

  • NEPHIL MATANGI MASKAY

    (Nepal Rastra Bank, Nepal)

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.

Suggested Citation

  • Sisira Jayasuriya & Nephil Matangi Maskay, 2010. "Enhancing Economic Integration In South Asia: Issues And Prospects For Closer Monetary Cooperation," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 55(01), pages 185-206.
    • Handle: RePEc:wsi:serxxx:v:55:y:2010:i:01:n:s0217590810003663
    DOI: 10.1142/S0217590810003663
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    References listed on IDEAS

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    1. Nephil Matangi Maskay, 2003. "Patterns of Shocks and Regional Monetary Cooperation in South Asia," IMF Working Papers 2003/240, International Monetary Fund.
    2. Arief Ramayandi, 2005. "ASEAN Monetary Cooperation : Issues and Prospects," Finance Working Papers 22028, East Asian Bureau of Economic Research.
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    6. Baysan, Tercan & Panagariya, Arvind & Pitigala, Nihal, 2006. "Preferential trading in South Asia," Policy Research Working Paper Series 3813, The World Bank.
    7. Hadi Soesastro, 2005. "Accelerating ASEAN Economic Integration - Moving Beyond AFTA," Trade Working Papers 22034, East Asian Bureau of Economic Research.
    8. World Bank, 2008. "World Development Indicators 2008," World Bank Publications - Books, The World Bank Group, number 28241.
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    Cited by:

    1. Biru Paksha Paul, 2013. "Output Relationships in South Asia: Are Bangladesh and India Different from Neighbours?," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(1), pages 35-57, March.

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    More about this item

    Keywords

    South Asia; monetary integration; economic integration; monetary system; F33;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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