Published On: Mon, Nov 23rd, 2015

Pakistan considered as linchpin in regional integration activities

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KARACHI: Pakistan may play a pivotal role in enhancing connectivity between Asian sub-regions, which can promote social stability and peace and improve governance and financial stability, says an international study on Monday.

The study, conducted by the Independent Evaluation at the Asian Development Bank (ADB), says the bank should give greater attention to the countries, including Myanmar, Pakistan, Papua New Guinea and Timor-Leste, located between two or more Asian subregions.

“These linchpin countries have the potential to yield high impact from RCI (regional cooperation and integration) activities,” says the report, ADB Support for RCI.

ADB remains one of Pakistan’s largest development partners, having provided the country more than US$25 billion in loans, as well as more than US$200 million in grants, as of 31 December 2014.

This funding included 316 loans for infrastructure improvement and reforms.

Lately, China agreed to finance US$46 billion to develop a road and economic corridor (around 3,000 kilometres) from its newly opened land port in Karasu in western Xinjiang Uygur Autonomous Region through Tajikistan and Pakistan to the southern Pakistan port city of Gwadar.

Another gas pipeline project will export 33 billion cubic metres of natural gas per year from Turkmenistan to Afghanistan, India, and Pakistan over the next 30 years.

Pakistan is likely to become a full member of the Shanghai Cooperation Organization, an intergovernmental organization founded in 2001 by China, Kazakhstan, Kyrgyz Republic, Russia, Tajikistan and Uzbekistan.

The study says South Asia is among the least integrated regions in the world with lack of financial and monetary integration.

“While trade among Asian countries in the global trade network has increased significantly—led by China and India—no Asian subregion has experienced significant increases in intraregional trade shares over the last decade,” it says.

“While intraregional trade in Southeast Asia stayed at about 24 percent of total trade, for all other subregions trade integration in 1995 was higher than in 2012, indicating that trade with countries outside their own subregion increased more than intraregional trade.”

The Independent Evaluation finds that South Asian economies (including Pakistan and Afghanistan) have little intrasubregional trade, but carry out substantive intersubregional trade.

It says over the last decade China and India registered an annual growth rate of seven percent. Trade has fuelled the rapid growth.

Computer-aided production systems that helped connect value chains across different geographies facilitated the intra-industry vertical trade process in the Asia and Pacific region, it adds.

“The Asia and the Pacific region has emerged as the most important driver of global economic growth, accounting for 70 percent of total global growth,” the report quoted the International Monetary Fund as saying.

“Internally, the growing trade levels have helped to pull hundreds of millions of people out of poverty.”

Asia’s trade rose to more than $9.8 trillion in 2014 from around $354 billion in 1985.

“During the same period Asia’s share of world trade doubled to 30 percent from 15 percent,” says the report.

It says there appears to be substantial untapped potential for further regional integration.

“While attention to infrastructure ought to continue, natural resource cooperation—transboundary air and water pollution control, management of biodiversity, forestry, and fisheries—deserve far greater support than they have received in the past,” recommends the Independent Evaluation.

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