CONFLICTS EXACT HIGH PRICE FROM SOUTH ASIAN ECONOMIES
Amin Ahmed
ISLAMABAD: South Asia suffers economically and socially because of conflicts between countries and within them, says a report by World Bank economists.
Well-known and noteworthy examples are the Taliban-led insurgency in Pakistan and Afghanistan and the armed campaign against Indian rule in occupied Kashmir, says the report entitled ‘Accelerating Growth and Job Creation in South Asia’.
The report — edited by World Bank economists Ejaz Ghani and Sadiq Ahmed — says the development cost of the conflicts is considerably high because of loss of life, restrictions on people-to-people contact across countries, high financial cost of military and other security-related operations, and lack of economic, social and political cooperation.
Cross-country conflict is the most important reason for South Asia being the least integrated region in the world.
In Pakistan, the NWFP and Balochistan are widely regarded as conflict-hit regions. Afghanistan and Sri Lanka have also witnessed long-drawn conflicts.
Discussing possible measures to ease the situation, the report says that by and large ‘efforts to curb ethnic conflict with force appear to have exacerbated the intensity of conflict’.
Ensuring good governance that allows participation of citizens in the development effort can play a key role in reducing conflicts, says the report. Better economic cooperation and stronger trade relations can be helpful in reducing cross-country conflicts.
Promoting cooperation during times of conflict and in using resources to achieve growth, and then sharing the benefits of growth with the disadvantaged groups, is the main challenge facing the region.
In South Asia, remittances are almost twice as big as private debt and portfolio equity, three times as large as foreign direct investment and seven times the official development assistance. It is estimated that over 22 million people (or 1.5 per cent of South Asian population) live outside their country of birth.
In 2007, top South Asian countries in terms of recorded remittances were India ($27 billion), Bangladesh ($6.4 billion) and Pakistan ($6.1 billion), collectively making the region the third largest regional recipient.
The region’s countries face the daunting task of accelerating growth and striving for a middle income status. Though this is a ‘stretch target’, attaining the objective is not impossible. But it says: ‘There is no magic formula that will propel the region towards higher growth rates.’
There is ample room to achieve and sustain higher growth rates if South Asia can take advantage of its geography and demography and accelerate the implementation of second-generation reforms.
These include: market integration, both globally and regionally; inclusive growth that will convert the ‘demographic dividend’ in South Asia into a ‘window of opportunity’; improved infrastructure that will behave like second-nature geography and propel higher and inclusive growth through improved connectivity, allowing its benefits to be shared widely; strengthened institutions that will result in a stronger business environment and less conflict and corruption; and mainstreamed management of regional public goods into the national development agenda.
After East Asia, the region is the second fastest job creator in the world. And within South Asia the largest job creation is in the services sector, with the manufacturing sector also showing progress.
Jobs in the agriculture sector are shrinking, however. As the sector modernises and farmers move up the value chain — making better use of retail networks, storage facilities, refrigeration facilities and transportation facilities from the field to the market — more jobs are likely to migrate from agriculture to other sectors.
The report says high growth in South Asia cannot be sustained without better management of natural disasters and regional public goods. The region has lost a significant amount of its GDP because of natural disasters. The impact of natural disasters is particularly deep in South Asia because of its high population density, according to the report.
From the Himalayas, where glacier melt is already changing water flows in ways that remain to be understood, to the coastal flood plains of Bangladesh and Pakistan, South Asian countries need to adapt to climate change, the report asserts.
The melting of Himalayan glaciers leads to the disastrous prospect of reduced water availability in the region’s rivers. Therefore, it is important that South Asian countries promote regional cooperation in the water and climate change sectors, says the report.
(Dawn October 29, 009)