Regional Economic Cooperation in South Asia and South-East Asia
Since the 1980s, globalization has been a major driving force in international economic relations. More open markets and fewer restrictions on capital flows have made for a huge increase in global trade and capital flows, especially FDI. Globalization has enabled export-driven economies to exploit the opportunities of freer trade to capture new markets and to exploit scale economies. East and South-East Asia have been major beneficiaries of globalization; South Asia much less so. In this regard, it would be appropriate to reiterate that, based on one of the least contested axioms of classical economics, international trade promotes economic growth. Countries and, indeed, regions within countries can specialize in doing what they are best at and continue to improve at what they are doing. The rationale for cross-border trade can be summed up in three ways: one, different goods (outputs) require different resources (inputs) in different proportions; two, such resources are unevenly distributed in the world; and three, while some resources can be internationally exchanged, the costs of transporting them can make their exchange commercially unviable. It is therefore more rational economically to transport the finished goods than the resources or inputs that go into their production.
KeywordsEuropean Union Free Trade Comparative Advantage Economic Cooperation Trade Liberalization
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