The seven countries of South Asia have a direct bearing on their economies. Within the region, India is the largest nation in population and area.
Its population m year 2000 has crossed the mark of one billion people and is next to China, in the world, in the population size. Maldives is the smallest country in the region, both in terms of population and area. Bhutan and Nepal are land-locked while Maldives and Sri Lanka are island countries. Bangladesh, India and Pakistan are the only countries in the region where land and water is adequately available. Maldives is a tiny island in the Indian Ocean with only 300 sq.km land and 2, 76,000 people (in the year 2000). Bhutan, though, relatively large in terms of area (that is, 47,000 sq.km) has difficult terrain. Most of ranges are hardly accessible because of snow coverage. Nepal too is situated in the Himalayan Mountains and its area outwardly appears to be bigger but it is mostly mountainous.
With over one-fifth of the world’s population living in the region, South Asia has the world’s largest poor people. A large segment of the population lives in rural areas on subsistence agriculture. The Geneva based United Nations Development Programme has categorised four countries of South Asia region, viz., Bhutan, Bangladesh, Maldives and Nepal as the Least Developed Countries (LDCs). The remaining three countries, India, Pakistan and Sri Lanka are categorised as Developing countries.
In the last three to five decades, the countries of the region have made planned efforts to overcome some of the problems associated with low industrialisation and mass poverty. As a result, significant changes have taken place in their economic structure.
The share of various sectors in national income in respective economies has also undergone a change. Changes in the economic structures of the region has been rapid in the last two decades, that is, from 1980 to 2000. The share of agriculture has rapidly declined (barring in Pakistan) and that of services has gone up in all the economies (barring in Bhutan) while the industrial sector has remained stagnant.
Although the contribution of agriculture to GDP has gone down from 40 per cent in 1980 to 25 per cent in 2001, agriculture still provides employment to more than half of the employed people in South Asia. The service sector on the other hand has emerged as an important contributor to the GDP. Providing employment to a little over 22 per cent of the workforce, the service sector’s contribution to the GDP has risen from 36 per cent in 1980 to 49 per cent in 2001.
In Bangladesh, Pakistan and Sri Lanka, the service sector is contributing more than fifty per cent of the GDP. This increase has occurred mainly in the 1990s when these countries opened up their economies for (domestic) private and foreign investors.
The share of manufacturing sector in the GDP has remained more or less constant at 25 per cent during the last two decades. The decline or stagnancy in manufacturing and industry sector reflects the inherent weaknesses in basic infrastructure.
This is a cause for concern as such a decline not only robs the employment generation potential of this sector but ultimately adversely affects sustainable development. The high growth rate in manufacturing and industry sector is seen as an essential element in enlarging the other sectors of an economy.
The lack of momentum in manufacturing and industry sector in South Asia has caused deterioration in employment generation and eventually led to mounting pressure of poverty.