The deep-rooted rivalry between India and Pakistan is taking a huge toll on their economies, so much that a recent report by World Bank states that their annual trade could be $37 billion instead of the present $2 billion.
World Bank’s report states that trade between India and Pakistan, the two largest economies of South Asia, can grow up to $ 36.9 billion from $ 2.1 billion if both countries set aside their differences and barriers to trade.
The report, which was presented last week, urged the South Asian rivals to cooperate instead of remaining in conflict, as it is the world’s least economically integrated region. It is the region that contains 40% of the world’s stunted children and 33% of world’s impoverished populace.
The World Bank report further states total “intra-regional” trade in goods can jump up to $67 billion from $23 billion given the South Asian nations remove the tariffs and non-tariff barriers related to trade and people-to-people contact. Authors of the report also maintain that “trade liberalization in South Asia has not been smooth”. In fact, many countries have increased the tariffs and restricted inter-regional trade further.
The annual trade between India and Bangladesh is worth $6.5 billion, which could be $16.4 billion if the two countries reduced their existing barriers to trade. Similarly, the trade between Bangladesh and Pakistan, which is $0.8 billion currently, can be upwards of $1.4 billion in the absence of trade barriers.
It is pertinent to mention here that both Pakistan and India have been grappling with extreme poverty, unemployment, inequality, and many other socio-economic issues for years. Both countries want to boost trade to tackle extreme poverty. However, the ties between the two countries have remained bitter since their inception.
via Bloomberg, World Bank