Improved governance, infrastructure key to higher south Asia growth
19 Oct '06
3 min read
A new ADB report says that improved governance, better quality of regulation and infrastructure can help South Asian economies emerge as the “New Tigers” of Asia.
The South Asia Economic Report (SAER) underscores that South Asia, led by India and Pakistan, posted stellar growth in 2005 and has registered higher growth than its peers in Southeast Asia in the past five years. High growth is forecast to continue through 2007.
While developments in India are clearly the predominant factor in the improved economic performance of South Asia, most other countries in the region have been on a similar trend, although their improvements generally are more modest.
The banking sectors in South Asia have not only improved their performance over the recent past, but have also reduced the performance gap between themselves and other economies in Asia.
However, the performance in state-owned banks has generally been weaker than that of private and foreign banks. Restructuring and privatizing state-owned banks should remain a high priority on the reform agenda.
Despite a shift towards market liberalization, South Asia continues to be overregulated. As a result, it is not fully realizing its growth potential. Firms are frequently confronted with a heavy burden of administrative regulations.
For example, while it only takes an average of 5 signatures from government officials to export goods and 7 to import in large Southeast Asian economies, the corresponding number of signatures required in South Asia is 12 to export and 24 to import.
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