Modern Economic Theory of Community Development

There is no denying the fact that the functionalist is well conversant  that nation-state system is unpredictable and  is the cause of aggression divisions, which chip away at the real needs and interests of human race. They tried to give significance on explicit tasks of economic and welfare co-operation. This would avoid discordant political debate, but at the same time create a community of interest which would ultimately render national frontiers meaningless(Taylor 1978: 234). According to the functionalist view technical collaboration in one sector generates a felt need for functional teamwork in other sectors.

The neo-functionalists consider integration as both a process and an outcome, but they prefer to emphasize on co-operative decision-making processes and elite attitudes in order to assess the progress towards integration. They have focused primarily on formal institutions in an attempt to determine the extent to which important functions are carried out by national as opposed to international agencies..  

The traditionalist approach seeks to measure the process of integration by watching the flow of international transactions, such as trade, tourists, letters, and immigrants. Karl W. Deutsch and some other writers have termed this perspective the communications approach. Deutsche hypothesized that, the more one nation-state interacts with another, the more relevant they become to each other; however, such an increase in mutual relevance may not lead to integration unless it is accompanied by mutual responsiveness, which was defined as the ability to respond satisfactorily to the demands contained in the transactions between the actors involved. In the transactionalist view, a community cannot exists unless its members are interdependent, and such interdependence can only be established by a network of mutual transactions( Taylor 1978: 243).

Although it seems that the South Asian states wanted to emphasis on functionalist and transectionalist approach in their regional integration, but they did not transfer their  core issues to their regional body. Even communication among states did not increase considerably. Mutual response is also very low in the area. For heterogeneity in various fields among the South Asian states mutual transaction has not developed. Analysis of the heterogeneity among the South Asian states is the main issue of the present paper.

           

e)         Process of Integration

The  most common route to regional integration is through progressive liberalisation of trade relations between members of a regional community, which could progress through various stages: First a Preferential Trade Area (PTA) with lower tariffs; then a Free Trade Area (FTA) with no tariffs; next a Custom Union(CU) with common external tariff applied to external trade; a Common Market with free movement of all factors of production and stability in internal exchange rate with full convertibility; an Economic Union with common currency and a unified monetary policy and a Political Union with unified judicial and legislative process of members states. By following above mentioned process of regional integration we can evaluate the position of a  regional integration initiative ( Mistry 1996: 86).

           

On the other hand, the term regional co-operation is a loose construction of integration. It denotes a willingness on the part of countries to work together in achieving regional economic interests on the assumption that, in the long run, this will result in enhancing national economic interests and welfare even if national interests might need to be subordinated in the short run (Mistry 1996: 86).

SAARC: incorporation or mutual aid ?           

           

But the question is whether SAARC is a regional integration or simply loose co-operation among the states? In the light  above discussion we will be able to see the position of SAARC as a regional co-operation. In December 1997 SAARC will be  twelve years old. If we take stock of regional co-operation from beginning to present time, we will see that, since inception, the association has been concentrating on  peripheral issues than core issues.  From the very beginning core areas were excluded from SAARC agenda, and that position persists to this day. Thus after its encouraging launch, SAARC activities have stagnated and have failed to promote any significant co-operation in the core political and economic areas.

However, in other areas SAARC has established number of institutions. For example, in 1988 the SAARC Agricultural Information Centre was established in Dhaka.  The Technical Committee on Education (established in 1989) and the Technical Committee on Sports, Arts and Culture  (established in 1983) were amalgamated into a single Technical Committee on Education and Culture. SAARC has also established  the Technical Committee on Environment. The SAARC Meteorological Research Centre has already been established for sharing information data in this respect. The first meeting of the Technical Committee on Health and Population activities was held on 1984. Important activities undertaken by this committee include the setting up of the SAARC Tuberculosis Centre in Kathmandu in 1992. The SAARC Drug Offences Monitoring Desk (SDOMD) has been established in Colombo to analyse and disseminate information on drug offences, and efforts have been directed for conclusion of regional drug convention and harmonisation and consolidation of national drug laws. The Technical Committee on Rural Development identified priority areas for implementing its programmes on poverty alleviation, employment generation, women development, environment and technology transfer. There are technical committees for Science and Technology; Tourism; Transport and Women Development etc. Core political and economic areas remain absent from  their co-operation process. SAARC states have not assigned any responsibility to SAARC to develop rules and regulation, which they can apply for all. They did not ceded part of their sovereignty to their regional body. The SAARC states are working together to achieve  their regional interest on the assumption that, in the long run, this will result in achieving harmony and welfare in the region. In this respect we can term SAARC as a mere regional organisation for co-operation ( http: www. south asia. com/saarc/brief new.htm ). SAARC has some progress in its process of integration. For example, the South Asian states signed the  SAPTA (South Asian Preferential Trading Arrangement) on 11 April 1993 in Dhaka during their seventh summit. SAPTA is working towards removal of tariffs and non-tariff barriers. In May 1997 at the ninth SAARC Summit, member states agreed steadily to relax trade barriers until a Free Trade Area (FTA) is established by the year 2001. So the eventual goal of the South Asian states is to establish South Asian Free Trade Area (SAFTA). Though the official name of organisation is South Asian Association for Regional Co-operation, but we can consider it as a South Asian integration process. If South Asian states can minimise the possibility of war among themselves, then the  word ‘integration’ will be more appropriate for SAARC.

Heterogeneity in various fields among  the South Asian countries hinders the progress of co-operation among the SAARC states. Heterogeneity in political and economic fields will be detailed later on in this paper. However, there is heterogeneity in other fields, too. For example, ethnic and religious, linguistic, demographical and other differences hinder regional co-operation in South Asia

            Heterogeneity in religious culture sometime creates serious problems in South Asia. In terms of number of followers, Hinduism has the largest number of followers, with Islam and Buddhism being the two other major faiths. Although a strong secular movement was launched by the Indian and many other South Asian governments,  it failed to minimise cultural gaps among the various religions. Most prominent clashes between religious groups seem to involve Hindus and Muslims, or one Muslim sect against another, or Sikhs and Hindus, or Buddhists and Hindus. Relations between the two  most powerful states of South Asia, India and Pakistan, have been greatly complicated by religious factors. Clashes between Sri Lanka’s Buddhist Sinhalese majority and the predominant  Hindu Tamil minority have destroyed the peace not only in the island state, but also to some extent in India. Pakistan continues to proclaim itself an Islamic state (there are virtually no Hindu left in the country). India is officially secular, although about 11 percent of India’s population is Muslim. Hindus comprise 13% of Bangladesh’s population. The minorities in both countries are discriminated against, in fact if not in law, and a recurrence of communal violence in either country could undermine relations between New Delhi and Dhaka. Cross-border religious links in South Asia create suspicion and friction between majorities and minorities within states rather than bonds between the countries. So the communal relations in South Asia necessarily possess a majority- minority dimension cutting across national boundaries. The dynamics of Hindu-Muslim relations in the Sub-continent directly impinge upon the  state-to-state relations (Emajuddin and Kalam 1992: 293).

Different ethnic groups in the region sometimes create insurgency problems in South Asia. This is one of the reasons of  mistrust among the South Asian states. For example, India blames Bangladesh for providing arms to Indian ethnic groups who are fighting for autonomy. On the other hand, Bangladesh blames India for giving shelter and arms to Bangladeshi insurgents. Ethnic crises between Tamil and Sinhalese creates problem between Sri Lanka and India. It is  common believe in Sri Lanka that Indian support for Tamil people has created this ethnic crisis. Diversified Indian ethnic groups sometime create internal problem in India, which has serious impacts in other countries of the region. Although South Asia consists of seven states, a case can be made for as many more. Starting from the north-west of the Sub-continent, ‘Pathans’, ‘Sikhs’, ‘Kasmiris’, ‘Tamils’, ‘Mizos’, ‘Nagas’, ‘Bangalis’, and ‘Chakmas’ are some of the nations that have raised the question of their separate identity ( Khan  1991 :122).

Linguistic heterogeneity creates problems of communication among the South Asian people. If we look at Latin America, we see that Spanish is a common language there, which helps develop better communication among the countries. On the other hand, in  South Asia, most of the states have more than one language. For example, people in   the south India do not understand  Hindi and Hindi speaking people often do not understand other languages.  Sometime it creates separation movement also. For example when Urdu was declared as the state language of Pakistan, the Bangali people in the eastern wing of Pakistan started their language movement, which eventually became the separation movement. Similarly, when Sinhalese was declared as the state language of Sri Lanka, the Tamil  minorities started their separation movement from Sri Lanka.

Geographical Differences

           

Compared to other regions, the differences in size and population are very high among the South Asian countries. The disparities between India and the other states are striking. India’s territorial size is nearly four times that of Pakistan and its population is five times larger than Pakistan. India’s territory is more than three thousand times as large as that of  Maldives and the difference in population is similar. Bhutan is also a very small country in comparison to India. The great diversity in size, population  creates problem. India is not only bigger than other members of  SAARC, but is also bigger than all the others put together. This creates psychological problem for the smaller countries.

In the region India, Pakistan and Bangladesh have access to the sea, Sri Lanka and Maldives are island states and Nepal and Bhutan are land locked. Indian objection is a problem for Nepal to enjoy transit facilities has offered by Bangladesh. The Geographical location of Nepal and Bhutan have made them dependent upon India. For example, in 1979, the Janata government of India removed its objection of transit facility to Nepal. After that Nepal established a transit liaison office at Chittagong( Bangladesh port) to handle its export and imports from overseas countries via Bangladesh. However, it received a severe blow when the separate trade and transit treaties concluded between Nepal and India under Janata government expired in 1989 following which India blockaded Nepal (Halim 1992: 122).

Geographical differences of south Asia are such that India, separates one smaller neighbour from the other. All countries of South Asia have common boundaries with India, except Sri Lanka and Maldives. Geographical differences increases the level of difficulty in multi-lateral negotiation for solving common problems, particularly such common problems as the sharing of water resources, and controlling pollution which require co-operation from more than two co-members. Territoriality is an issue which has in the past created irreconcilable problem of sovereignty leading to three wars between two co-members. Territorial disputes continue to cloud the relationship between India and Pakistan, and India and Bangladesh ( Khan 1991: 48-49).

            Political Diversity

The political heterogeneity among the SAARC states greatly hinders effective regional co-operation in South Asia. The political issues are absent in SAARC agenda. It is the most important issue whose solution is very mush needed for effective regional integration in South Asia. Political diversity can be seen in relation to:

a)      political interests and concepts of security;

b)      governmental system;

c)      principles and values of governance and statecraft;

d)     nature of conflicts;

e)      capability to resist the regional hegemony;

f)       objectives from SAARC;

g)      threat perception;

h)      constitutional arrangements and

i)        attitudes of ruling elites.

Each of those elaborated below. At the same time certain important commonalties exists among the member states. These are discussed the latter part of this chapter.

a)         Diversity in  political interests and concepts of security

Political interests among the South Asian states are highly diverse. As I mentioned earlier, both India and Pakistan are very big in size and power in comparison with other smaller states. For that reason their political interest is also different from other member states of SAARC. Identification of common interests is a very difficult task in the region.             For the above mentioned reason, they have diversity in their concepts of security also. For example, India as a core power of South Asia sees a strategic unity of the region and considers the security of the small regional actors as  integral to its own security. It considers the latter to be the exclusive strategic backyard of India. On the other hand, the small states tend to perceive India as the main source of external threat to their security. 

b)         Diversity in Governmental Systems

The diversity in governmental systems compounds  existing problems in South Asia. India and Sri Lanka have traditionally  practised representative democracy. The Indian experience of democracy has had severe tests in recent years,  since the emergency period of 1975-77. While Sri Lanka has had to compromise democratic norms more recently as a result of ethnic crisis. The two are nevertheless considered relative success stories among Third World democracies. Pakistan and Bangladesh, particularly the latter, have in the beginning of the 1990s witnessed sweeping democratic transition in their domestic scenario. However, in a longer term perspective, both of these countries have always been swinging between military dominance in politics and democratic experimentation. Nepal’s transition to democracy is also yet to be firmly rooted. Bhutan has been striving to retain the authority of monarchy as the dominant institution, while the Maldives has been practising one-party rule.

c)         Diversity in Principles and Values of Governance and Statecraft   

Divergence is manifest in values and principles followed in governance and statecraft. The Indian political system is professedly a blend of democracy, socialism and secularism, though these lofty ideals have remained far from fully translated into reality. Most significant is the recent trend towards increased influence of Hindu fundamentalism in Indian politics. Bangladesh started off with more or less same principles as the fundamentals in statecraft, but it later changed  course  towards increasing influence of religion, an issue on which a national consensus has yet to emerge. Pakistan has Islam as the basis of its political system, while the Maldives is an Islamic society with relatively less influence of religion in politics. Nepal remains under Hindu influence whilst Bhutan and Sri Lanka are Buddhist societies.

d)         Diversity in the Nature of Conflict

The nature of conflict among the South Asian states is diverse too. The nature  of the conflict between India and Sri Lankan  is different from that of the conflict between India and Bangladesh, Pakistan or Nepal. Some conflicts are ethnic, others are religious, location or border related. For this reason India’s insistence on bilateralism gets priority, and India takes advantages of settlement of those conflict as per its wishes. One important dimension of the conflict is that all are Indo-centric.

e)         Diversity in capability to resist hegemony

There are different capability among the smaller states of  South Asia to resist the hegemonic attitude of India. This attitude makes it difficult for the small South Asian states to act independently. This hegemonic attitude was reflected by Indian doctrine of regional security. A few words are mentioned here:

‘India has no intent of superseding in internal disagreement of a South Asian country and it strongly opposes intervention by any other. India will not tolerate external intervention in a conflict situation in any South Asian country if the intervention has any implicit or explicit anti- Indian implication. No South Asian government must therefore ask for external military assistance with an anti-Indian bias from any country. If a South Asian country genuinely needs external help to deal with a serious internal divergence situation or with an intolerable threat to a government legitimately established, it should ask help from a member of neighbouring countries including India. The exclusion of India from such a contingency will be considered to be an anti-Indian move on the part of the government alarmed.

Pakistan has time-honoured the superior military strength of India, it has shown no readiness to curtail its freedom of action as an independent state. Although Bangladesh has limited  scope of independence,  for Nepal and Bhutan it is more difficult to resist or say anything  at all about such regional security doctrine. For example, Sri Lanka failed to resist Indian hegemonic attitude when in 1977 the Jayawardene government opted for a free-market economy, making Sri Lanka increasingly receptive to western capital and technology. At that time the relationship with Pakistan improved dramatically. The Jayewardene government virtually tried to distance itself from India. India then took the opportunity of the Tamil separatist issue to put pressure on Sri Lanka. Apart from sheltering and arming the Tamil militants, the Indian ruling class blew out of proportion some of the features of Sri Lanka’s relationship with United States and Pakistan. India cannot apply this type of hegemonic attitude towards Pakistan ( Ahmed 1992: 88).

 

f)          Differences in Objectives from SAARC

There are differences in objectives in respect of SAARC among the South Asian countries. SAARC is indeed a facility and an opportunity for Nepal and Bhutan to maintain close relations with their South Asian neighbours. Above all, it has been perceived by the smaller members as a source of peace and stability in the region. For these small states these contacts and frequent interaction provide a means for generating mutual confidence and understanding, which may help in the resolution of bilateral problems and in creating harmony. Such harmony could also, in due course, narrow down the prevailing strategic divergence among SAARC members.

Unlike the other members, Pakistan has been cautious in expanding institutional and developmental aspects of SAARC. Its objective was to thwart India’s presence and influence at the same time to expand its interaction with all the other SAARC countries. Pakistani representatives have sought to use the SAARC forum for propagating their  specific policy proposals aimed at embarrassing India.

For India, SAARC has been both a challenge as well as  an opportunity. The challenge has lain in the collective pressures of the neighbours, and the opportunity in the possibilities of making the neighbours look inward, into the region, for their developmental and security needs. India has pursued a two-pronged strategy to advance its regional objectives through SAARC. One has been to gradually push the expansion  and deepening of  the Integrated Programme of Action (IPA) so as to cover  core economic areas like trade, industry and finance. The idea was to expand and consolidate infrastructure and social linkages at various levels among South Asian countries and to create a basis for interdependence. This in the long run could weaken the centrifugal tendencies of its neighbours and thus narrow down the divergence towards SAARC’s ties with other regional organizations. The inflow of foreign funds in the organization supported these long- term objectives. The other aspect of India’s strategy has been to evolve consensus in SAARC on international economic and political issues. Such consensus would strengthen India’s own bargaining position in international fora. This competitive game and diversity in objectives may help to sustain SAARC but is not congenial for effective regional integration ( Khan 1991: 60-63).

           

g)         Variety in risk awareness

There are diversities in threat perceptions among the South Asian states. For example, the presence of a superpower in the Indian Ocean draws more fire from some South Asian neighbours than others. Practically, threat perceptions in South Asia seem to be quite a mixed issue. The smaller members of the community fear India, and some of the South Asian states are concerned about American interests in the region. China figures as a possible threat in the Indian calculations, but China is uniformly absent from the threat perceptions of most of the other South Asian states. These differences in perception and response point to the absence of any kind of a regional outlook on defence issues. For this reason different military capabilities have emerged in the South Asian region, which is in no way congenial for effective regional integration ( Khan 1991: 128-29).

           

h)         Diversity in Constitutional Arrangement

There is diversity in constitutional arrangements among South Asian states. For example, India and Pakistan have provincial government, but others lack these. It takes much time in India to ratify a treaty which as a consequence of having provincial governments. For smaller states it is very easy to get approval from their parliaments. Sometime in India central government’s willingness is not sufficient to solve a problem without the help of provincial government and the Indian Supreme Court. Sometimes this time-consuming system creates mistrust amongst smaller treaty partners. This situation is also not congenial for effective regional integration in South Asia.

           

i)          Diverse Attitudes of Ruling Elite

Different attitudes among the ruling elite’s is further  factor that hinders effective regional integration in South Asia. For example, since 1971 the Indian ruling elite has gradually realised that if  outside powers could be excluded from the region, there would not be a single state in South Asia to challenge India either diplomatically or militarily, or both. On the other hand, the elite’s of Sri Lanka and Nepal have an attitude to seek assistance from extra-regional powers. In Pakistan and  to some extent in Bangladesh, the ruling elite’s hold anti-Indian attitudes. They frequently express and use those attitudes in their policies and politics. The Nepali ruling elite remains busy to play ‘trump card’ vis-`a-vis China and India. The crisis management task becomes very difficult when perceptions of the ruling elite’s are mutually antagonistic.

3.2       Political Commonality

a)         Common Heritage and Culture

SAARC members have some common heritage and culture. They have a common historical past. Before  British rule, India, Pakistan and Bangladesh were under the same rule. Then they were under British rule for  two hundred years. They have inherited this political system from British India. Those who were not under British rule,  also adopted many things  from British colonialism.

b)         Democratic Government

The important commonality in South Asia is that it has now a democratic face. At the time of the creation of SAARC this situation was different, as democratic, authoritarian and monarchical regimes were there. Now, for example, India has a long history of  democratic institutions; Pakistan has a democratically elected government now,  Bangladesh has a parliamentary form of government and Nepal also. Even the king of Bhutan is thinking aloud in terms of sharing power with the people. In the Maldives, the dominant ruling party has been responsive to  popular demands. Sri Lanka has kept up its democratic flag high even in the midst of an ongoing dark, dismal civil war (Emajuddin and Kalam 1992: 257 ).

c)         Similarity in Nature and Character of Political Personality

Although there is wide divergence in the political set-up of the seven South Asian countries, nature-wise and characteristically there is great affinity. In other words, the political personality of the states of the emerging system is somewhat common, notwithstanding their varying constitutional frameworks. In essence personalised policies, politics, and sloganizing traditionally characterised the political processes in almost all the states in the region.

d)         Administrative Commonality

There are similarities in the administrative systems in South Asia. They have the same diplomatic customs and procedures, although these vary according to the size of the state and the degree of a political development. All states follow the standard methods used in modern world. India and Pakistan have  inherited same administrative system from British rule. The same rules are in practice in Bangladesh also. All the rules and regulations in South Asia grew out of a tradition which concentrated on collecting taxes and maintaining law and order and which gave little attention to popular participation or economic development. These commonalties, although some are not democratic, are helpful for creating a congenial atmosphere in  their various negotiations.

In foreign policy decision making or the formulation of other external objectives, the role of private citizens or of public opinion is everywhere non-existent. The absence of organised and enlightened pressure groups, a low literacy rate and a common apathy in the administrative matter make such exercises highly elitist in all the seven countries. The  most important thing is that the horizons of the political community of South Asia do not extend beyond their own localities. Although this commonality is not congenial for effective regional integration in South Asia but they can take the initiative to develop their horizon together.

Above mentioned points of political heterogeneity and commonality among South Asian countries shows that heterogeneity is more dominant in the area than commonality. The exclusion of bilateral and contentious issues from the SAARC agenda will continue to keep inter-state political relations volatile. Thus SAARC’s  emphasis on the non-political approach to expand the areas of co-operation may not help SAARC to reach the stages of regional integration. India and Pakistan should have to take initiative to minimise their problems. India as the big power in the Sub-continent has to show co-operative attitude rather than dominant one. Indian co-operative attitude is very much needed to reduce the mutual mistrust among the SAARC states. Re-orientation of mental horizon of the regional political leaders, as I mentioned earlier, is very much needed. If they can think that, what is good for Dhaka is good for Delhi or Male or Thimpu or Colombo or Islamabad or Kathmandu, then something can be expected from SAARC.

            Heterogeneity in the Economic Fields  

Heterogeneity in the economic field also hinders effective regional integration in South Asia.  As I mentioned earlier, like political issues, the economic co-operation among the SAARC states  were also out of SAARC agenda. Some members of the SAARC were opposed to early inclusion of this core area, while others tended to support gradual induction under the agenda of co-operation. We shall now look into some aspects of  economic heterogeneity. Although in present day economic integration is gaining importance in South Asia  but  heterogeneity in this field tends to  create mutual suspicion.

a)         Unequal Size of the Market

The unequal size of the market appears to be one of the most important obstacles to the expansion of trade in South Asia. India is a great economic power in the region. It accounts for 59 percent of the import market, 62 percent of the export earnings, 41 percent the external reserves, 79 percent of manufacturing value added and 68 percent of manufacturing exports. In terms of exportable commodities, India owns over 5,600 commodities to export. Only Pakistan, which has about 4000 commodities, comes next in South Asia. Nevertheless, Pakistan is no match to India in industrial development and size of the market. But the position of other smaller members of SAARC in this regard are not same.

The fear of Indian economic domination over the economies of the smaller countries is a barrier to trade co-operation in South Asia. India’s economic domination is reflected in its trade imbalance with almost all the countries of South Asia, except Pakistan. In 1992, India exported US$ 258 million to Bangladesh, US$5 million to Maldives, US$ 85 million to Nepal, US$ 47 million to Pakistan, US$ 192 million to Sri Lanka. In the same year, India imported US$ 5 from Bangladesh, US$ 21 million from Nepal, US$ 149 million from Pakistan and US$ 13 million from Sri Lanka. The strong industrial base, technological development and its comparatively restricted market have given India a predominant position in South Asia. The spill-over effects of the fear of India’s economic domination is also reflected in its neighbour’s psyche. For instance, it is manifested in the statement of a Pakistani analyst, who said: ‘It will be more appropriate to say that Pakistan is not willing to have unregulated trade with India without adequate safeguards for its indigenous industries and comparatively high-wage labour force.’ If the adequate safeguarding measures that are incorporated in the South Asian Preferential Trading Arrangement for least developed members are not properly applied to them, the unequal size of the market will create the imbalance basis of  trade among the South Asian countries..

b)         Lack of Complementarily in Products

The South Asian economies are basically competitive rather than complementary as the products tend to be similar in the primary and consumer goods industries. Only in the more advanced manufacturing and capital goods sector would there be scope for a non-competitive trade, but this would overwhelmingly benefit India which alone has a significant consumer goods manufacturing industry. However, these products sectors, despite some lower transportation costs, are not necessarily cheaper or equal quality to foreign goods  and therefore there is limited benefit for smaller states to import from India..

           

The extra-regional export pattern of the SAARC countries is mutually competitive rather than complementary. Jute goods are exported by  Bangladesh as well as India. Tea exports are shared by Sri Lanka , India and Bangladesh. Pakistan competes with India in the world’s high quality rice market as well as in the cotton goods. Of late, Nepal has met a significant percentage of demand for hand-made carpets along with India and Pakistan. The SAPTA Agreement provides the least developed member states to promote their export prospects through technical assistance and co-operation arrangements to increase their production capacities. The achievement of complementarity in products under SAPTA may not be possible due to the absence of technical co-operation and development financing in the South Asian countries. Thus lack of complementarity  in products create problems to effective co-operation among the SAARC countries ( Ahmed 1995: 188).

c)         Diversified Attitude about Financial and Monetary Co-operation

Diversified attitude of SAARC member states about financial and monetary co-operation create problems among SAARC states. All members are not equally in same opinion about the creation of a regional development bank, a regional import-export bank and a regional finance corporation.

d)         Divergent Economic Interest

SAARC states have diversified interest in economic field. The formulation of a common strategy whether in respect of export or import may fumble at different stages because for such states as Bangladesh, Nepal and Bhutan, agricultural produce may figure prominently but for others i.e. India and Pakistan, finished products may be in an intermediate position. These divergence of interests are not congenial for effective economic co-operation.

e)         Different Levels of Development

There is wide diversity in the levels of development in South Asia. The smaller states have fear that trade liberalisation may benefit the larger countries more. They also worried that this liberalisation will create a relations of dominance and dependence between strong and weak partners. For example, India and Pakistan( to some extent) will derive greater benefit as because the smaller states have a very fragile industrial structure. This wide diversity in development are not congenial for effective co-operation among the SAARC members (Bhuyan 1992: 210).

f)         Difference in Levels of Poverty      

In comparison to other region, although the South Asian states are poor, but the poverty level is not  same among the countries. Pakistan and Sri Lanka are the less poor. India also belongs to developing country bloc. But Bangladesh, Nepal, Bhutan and Maldives are belongs to least developed group. For that reason there exists some heterogeneity in their attitude towards the donor. It is very difficult for the least developed countries of South Asia to face the pressure of donor in the same way as Pakistan and India do. There role in international organisation is also different to some extent.

4.2       Commonality in Economic Field

a)         Aid Dependency

The desire for better living standard and increased national power led the South Asian countries to seek external assistance soon after they won independence. All SAARC states are more or less aid dependent. Although it is a commonality among the South Asian states, but it does not help to enhance their regional co-operation. The reason is that for official aid, private foreign investment from industrialised countries they are the competitors.

b)         Money owing Burden

They are adversely affected by world terms of trade, face somewhat similar balance of payment and balance of trade problems. All have high debt-servicing liability . For that reason all have joined with other states of world in similar position in setting up their demands for the New International Economic Order(NIEO)( Kalam 1992: 297).

c)         Paucity

Although poverty level is not same in all member countries of SAARC but poverty is the main problem of South Asian economy. Alleviation of poverty may be considered as the main motive force behind their launching the South Asian Preferential Trading Arrangement (SAPTA). As many as 47 percent of the world’s poor live in the South Asian region, in terms of income levels. GNP per capita in this region ranges between US$ 180 to US$ 430 (Ahmed 1995: 169).

d)         Gratis Market Economy

The free market doctrine now appears to have become the new orthodoxy in all the South Asian countries. Although each countries are competing with other both in terms of liberalisation of trade and offering attractive packages of incentives for foreign investment, but this attitude is the reflection of their realisation of changing international economic relations (Rizvi 1995: 81).

Economic and trade co-operation are the most vital parts of regional co-operation in the present day international relations. The follow of export-import gets affected when economic relations between or among the countries are mostly unequal. The economic relations among the countries are affected as the political relations among the countries are inimical to each other. The adverse political atmosphere do not help to liberalise trade barriers. On the other hand, too much diversity is not congenial for effective economic and trade co-operation among the SAARC countries. Here the co-operation of India and Pakistan is necessary prerequisite for effective economic integration.

In view of the above it is significant that the closing stages of cold war has changed the whole scenario of international relation. It showed that economic superiority is very much needed to become a real power. After cold war three economic bloc the United States, the European Community and Japan have emerged. The end of cold war also helped to unite the Europe again. Eastern Europe is no longer exists as a separate socio-economic entity. All these have an impact on North-South relations. Under the new international order the developing countries have been further marginalised. This has significantly affected the countries in South Asia. In this changed circumstances, if the South Asian countries still remain in their old bilateral conflict they will not be able to play any sort of role in global order. They have to minimise their diversity for their existence. They must prepare themselves for the new global order ( Rizvi 1995: 60)

Promoting co-operation among a group of politically and economically heterogeneous countries as in SAARC is in fact not an easy task and is bound to involve a wide range of issues and problems confronting the member states. For transforming South Asia as a homogeneous system, appropriate transfer of loyalty and legal authority to the regional representative supranational body is an essential prerequisite. There should also be some conflict reducing mechanism, capable of settling regional disputes as well as circumventing instability and violence.

India have to change its present dominant attitude in the region. It have to prove by its attitude that it has no hegemonic desire in the smaller South Asian countries. Moreover, all the members must move closer to each other in terms of positive interaction; all should learn from each others experience and should avoid, as far as possible, a conflictual course. But first India should prove that it has really wants to help its smaller neighbours. Taking note of the fact that the countries of the region are widely dissimilar in respect of resource endowment, level of economic development, per capita incomes, and living standards,  co-operative efforts must be accompanied by appropriate safeguards for the smaller and economically weaker partners. If India and Pakistan  can ask for favoured treatment from Western countries, then they have to extend such type of favour towards their weaker partners. If India and Pakistan (larger and economically stronger in South Asia) takes greater responsibility, the smaller and the less fortunate ones will not feel deprive of the benefits of co-operation.

The countries have some commonality which can be helpful for greater co-operation among them. Their common heritage and culture, common economic problem and common administrative system can help them to work together. It is encouraging that two main contender of power in South Asia, India and Pakistan, have already started their bilateral negotiation. Although  there exists lot of suspicion, but some are hopeful that in the changed international order both of the country perhaps realised that their past conflict caused great damage to their economy without doing any help to  their common people. It is also encouraging that India lastly has agreed indirectly to include Kashmir issue in their bilateral negotiation. If they really able to solve their bilateral problem, then some diversity among the South Asian countries will be solved easily.

Although the desire for democratic government is a common attitude of South Asian people, which can be helpful for effective regional integration. But evidence from all the countries of South Asia suggests that the democratic process is still far from secure. Movement by the people have been instrumental in toppling authoritarian regimes and forcing popular elections, but thereafter the masses appear to have been marginalised. Despite the transition to democracy, the class composition of the leadership has remained very much the same. The elite who were associated with authoritarian regimes are also prominent in the new government. So the transition to democracy was not a complete defeat of the elite of authoritarian government. The actual transfer of power is the result of negotiation between old and the new elite. Another problem is that transparency and accountability is absent within South Asian democracy. If this situation prevails then the future of regional integration in South Asia may not flourish as desired by people of the region. Another problem is that in South Asia state still remains the patron of resources. Those resources are remains at the disposal of state to perpetuate the power of ruling class. The state is still a major source of capital to the modern sector through the public development finance institutions and nationalised banks. There is little evidence of any change in the culture of government anywhere in the region. They have to rethink about the structure of state .

In view of the above it is evident that Meaningful regional integration will require a fundamental restructuring of the economy based on mutual advantage for all the countries. Elite resistance is a problem to restructuring the economy and enormous political will is needed for this. For that reason popular support should be increased. The transition to democracy in Pakistan, Bangladesh and Nepal is a hopeful situation for the future of SAARC.