ABSTRACT
Despite geographical proximity and similar cultural attributes among South Asian countries that make economic integration feasible, the level of economic integration in the region is low. The dynamics of socio-economic disparities among the countries of South Asia have been further hindering the process of economic integration. Further, the volume of formal intra-regional trade among SAARC countries is very low, resulting in only 5.5 per cent of the total international trade. However, there is a huge amount of informal trade going on. Analysis reveals that weak physical infrastructure, poor transport and communication, tariff and non-tariff barriers and complicated rules and regulations impose huge costs on trade and restrict the movement of people. For deeper economic integration, it is necessary to create an enabling condition by expanding and harmonizing transport and communication infrastructure, such as railway and road networks. This chapter attempts to analyze the levels of regional imbalance in terms of per capita GDP, structural differences of economy and education and the implications on regional trade and economic integration of SAARC countries.
