In recent years, the global economy is witnessing certain dynamic and unprecented changes. Regional economic integration is becoming its prominent feature. In the South Asian Association for global economic system, South Asian Association for Regional Co-operation (SAARC) is the youngest regional grouping among the seven Asian countries, namely, India, Pakistan, Maldives, Sri Lanka, Bangladesh, Bhutan and Nepal, came into existence in the first summit at Dhaka in 1985. This group comprises over one-sixth of the world's population. Nearly 50 per cent of the world's poor dwelve in this region.
The following are the main objectives of SAARC:
1. To promote the socio-economic welfare and cultural development of the people in the region.
2. To achieve the goal of collective self-reliance.
3. To encourage active collaboration in the economic social, technical and scientific fields among the grouping nations.
4. To strengthen over-all co-operation and harmonious economic and political relations among the countries of the SAARC.
5. To facilitate optimum utilisation of human and material resources.
6. To develop free regional trade.
7. To stimulate investment flows and accelerate pace of economic development.
Empirical evidences show that there is an ample scope for extending trade and economic relations among the countries constituting SAARC region. These countries are competing for trade with other countries. For instance, India and Bangladesh compete for their share in the world markets for jute goods. India, Sri Lanka and Pakistan compete for readymade garments. Similarly, India and Sri Lanka compete for tea.
Through SAARC this kind of internal competition can be eliminated and the countries can improve their terms of trade by evolving unified marketing policies and practices. There is also a good potential to expand intra-regional trade among these countries on bi-lateral terms.
The SAARC countries should assume foreign trade as a priority sector under the rapid globalisation of their economies. They must have co-ordination of their technical knowhow and scientific research with mutual help for their industrial growth and development.
They have to redesign their tariff and non-tariff structure under a liberalised trade policy. They must built up a system for a common information pool to take advantage in global markets. The member countries of the SAARC would benefit themselves through co-operation in supply of inputs for production an a market for the outputs. The countries should ignore their political differences for the sake of regional co-operation and common welfare.
The progress of SAARC, in general has remained very slow due to lack of adequate consensus among the countries. For the success of SAARC co-operation the countries should undergo preferential trading arrangements, open data bank, start joint R&D programme and develop a common support service programme.