By Dr Saroj Bali, Assistant Professor, Department of Economics, University of Delhi
Asian region considerably lags potential in a trade. Reducing barriers need to be high priorities on the agenda of constituting governments and regional institutions. All the regional cooperation formed within the Asia are not working efficiently, this reflects shortcomings in terms of both hard infrastructure and soft infrastructure, investment agreements, and trade facilitation measures. Trade between South Asia and Southeast Asia has grown dramatically over the past decade, but remains modest relative to its potential, especially compared with the development of trade between Southeast and East Asia. South Asia, particularly lags in terms of integrating with production networks. Trade within the south Asia has also increased, but integration is very slow due to Pakistan and India problems. Supply chain network development has great potential. Supply chain networks between South Asia and Southeast Asia are still very modest, and have great potential for increasing trade between the two surgeons. Despite having great potential within the region, this region is lacking behind in the cooperation and utilising potential fully. The creation on of a new Silk Road gives Afghanistan the opportunity to maximize the value of natural resources, build human capacity, create jobs, pay for services, and capitalize on Central and West Asia’s economic potential. Pakistan’s strategic local on at the crossroads of Central, South, and Southwest Asia gives the country great potential to become a hub of economic activity, with three international seaports on its southern boundary at the Arabian Sea. They must understand that both the countries will get maximum benefits and they must take some positive step towards the right direction. India already has a large service sector, which has been a major source of growth. Considering the country’s young and growing population, the service sector needs to create more jobs for the millions who will join the workforce every year.
India can create more job opportunities for youth by exploiting lying potential idle through silk route. Labour mobility and capital mobility can be eased out. With the gradual spread of free trade, the growing presence on the international scene of transnational corporations operating as integrated production systems, the expansion and notable mobility of capital and a shift towards the standardization of development models. This long process has been fuelled by successive technological revolutions and most of all by the advances that have cut the costs of transportation, information and communications. The shortening of distances, in the economic sense of the term, is a cumulative effect of cost reductions and of the development of new means of transport, in combination with the capacity for the “real time” transmission of information, Access to information on a mass scale, however, became possible only with the development of information and communications technologies in recent years. These technologies have drastically reduced the cost of access to information, though not, obviously, the cost of processing it or, therefore, of making effective use of it. Advances in transportation, information and communications are part of a wider range of technological innovations which have resulted in unprecedented leaps in productivity, economic expansion and increased international trade. Silk route primarily a conduit for trade proliferation for the following advantages:
v Silk route would provide a sufficiently large market for reaching an efficient scale of output and greater specialization by pooling markets through the removal of remaining barriers to trade.
v The countries can substantially reduce the transportation and transit costs because of geographical contiguity among members.
v Capital goods produced within the region may be more compatible to the factor endowment of member states than those imported from developed countries.
v The increasing competition among the members who are sharing this silk route would result in technical efficiency in existing industries as marginal firms might be forced to reduce their costs.
v Economic Cooperation among member states would encourage them to pursue harmonious liberalization policies, resulting in the maximum realization of perceived benefits. The eliminated artificial barriers to trade within the free trade area may help evening out the price and exchange ratios among members. In trade relations of members, domestic competition may result in improved terms of trade. Members will also have enhanced bargaining position.
v Stronger regional co-operation may also pave the way for regional banks with joint ventures which might be influential in promoting regional investment in large projects on development of infrastructure on the silk route.
v As economic ties grow stronger and countries become committed to common economic goals, political problems may recede in their complexity. When economic benefits gain significance, amicable environment may be created for resolving political problems.
v As the economic ties grow stronger there is a possibility of transparency and the information about each other and possibly of more connectivity.
v Moreover the connectivity to china through North East countries can bring lots of opportunities for North Eastern States and can promote tourism. It is believed that North Eastern states are always treated as step motherly.
Silk- route needs to be strengthened for setting off trade in South Asia region. The strong and reliable connectivity between south Asian countries would boost up trade. One to one meeting of people of different religions, faiths, and cultures would assist in strengthening goodwill and harmony which is very much essential for peace and stability in South Asia region.