For better synergy and efficient distribution of scarce resources, there is need for changing the international economic order to fulfil the objective of creating opportunities for development of the last person on the earth
External Affairs Minister S Jaishankar recently said India should build deep national strengths during the Amrit Kaal that could drive the transition towards a developed economy and leading global power.
“As the most populous country that will be the third largest economy by the end of the decade, our goals and ambitions cannot be determined by the goodwill of others. We must build deep national strengths during the Amrit Kaal that will drive the transition towards a developed economy and a leading power,” Jaishankar said while addressing the inaugural session of the 8th Asia Economic Dialogue on February 29.
Jointly organised by the Pune International Centre and the Ministry of External Affairs, the Asia Economic Dialogue’s theme was: ‘Geo-economic challenges in an Era of Flux.’
Challenges faced by Global South
Geo-economics is perceived as a form of soft power operating through commercial channels like exchange of goods and services, sharing of technology and strengthening of financial relationships.
As we are passing through a different globalized world where there is more distrust than mutual interdependence; idea of efficiency and transparency in the market is being overruled by dominant partners/early movers, and several countries adopting various form of indirect or direct warfare (physical, economical, cyber, trade, etc.) to undermine the global orders.
If we look at challenges and potential solutions, the global community will have to work on two things: One is reimagining and revitalizing the World Trade Organization and second, promotion of economic integration in South Asia. The WTO has been an influential and unavoidable international organization in the last three decades. One of the major allegations it faces today is ignoring the unfulfilled development aims of Global South. It is also being accused of failing to advance the global community’s commitment to climate change action and sustainable development.
Today, the significant question before the 164 members of the WTO is whether to drift away from this global system or a transform to establish new rules and procedures of global commerce that promote a sustainable international economic order creating a win-win situation for all. An analysis by Daniel C. Esty and others (2024) have already suggested key reform areas such as reinforcing the commitment made in the 1994 Marrakesh Agreement for advancing trade in a manner that promotes sustainable development and encourages more inclusive standard setting procedure for trade in goods and services.
South Asia’s economic growth
Promoting Economic Integration in South Asia was the theme at the inaugural session of AED 2024. Of course, there is a need to promote the economic integration in South Asia with the global economic order on a just basis. There are eight nations in the region, accounting for more than 1.8 billion populations.
The share of South Asia in global GDP in the last two and half decades has significantly increased from less than 5 per cent in 2000 to more than 8 per cent in recent years. Per capita income also doubled in real terms and extreme poverty has significantly declined. According to the World Bank report, the number of people in the world living with less than US$ 1.90 per day declined from 1.7 billion in 2000 to 700 million in 2017 and a sizable part of this remarkable story has come from South Asia.
India is one of the examples of the remarkable achievement in poverty alleviation in the region. As per the World Poverty Clock updates, extreme poverty in India is less than 3 per cent. The latest South Asian Development Update shows that South Asia is expected to grow at the rate 5.6 per cent in FY 2024-25, which is marginally lower than previous year growth of 5.8 per cent. Due to fragile fiscal position and high debt-GDP ratio growth prospects are subject to downward risk, yet it is significant in the post-pandemic period.
India is at the fulcrum of growth in the region and recent estimates show that it is going to grow at more than 7 per cent in the current fiscal year. Moreover, the Sep’23-Dec’23 quarter GDP estimates has shown that India has beaten all forecasts to register an impressive GDP growth rate of 8.4% against the below 7% forecast, showing the strength of the South Asian nation’s economy.
Bangladesh, another important country in the region, is expected to grow at the rate of 5.6 per cent in FY 2024-25. Sri Lanka has also shown some signs of recovery and expected to grow at the rate of 1.7 per cent in 2024.
Challenges of not being economically integrated
Despite having geographical proximity and the existence of bilateral and multilateral agreements, South Asia is one of the least economically integrated regions in the world. Also, most countries in the region are competitors in the export market as their major supply  basket contains similar products like textile and apparel.
The intra-regional trade is just around 5.6 per cent. India’s trade within the region was minimal until 1999; it has significantly increased in recent years. The total trade of India within South Asia was 5.5 per cent in 2018-19, which increased to 7.32 per cent in 2022-23.
In the recent past, economic cooperation in the field of energy has taken place between India, Bangladesh, Nepal, and Bhutan. Energy being one of the core sectors that contributes to overall economic development.  India has agreed to purchase 10,000 MW of power from Nepal in the next 10 years.
These are signs of convergence of economic interests among countries of South Asia. To achieve a win-win situation for every nation, there is a feeling among experts that global economic order needs to be transformed for better synergy and efficient distribution of scarce resources. After all, the objective of globalization is to create opportunities for development of the last person on earth.
***Shishu Ranjan is Vice President of Barclays Bank and Dr Ajit Jha is an Assistant Professor at the Institute for Studies in Industrial Development (ISID), New Delhi; views expressed are their own