Political economy of South Asia

This chapter highlights that South Asia is a region where conflict has dominated cooperation. The overriding importance of politics over economic rationality is also due partly to the political regimes in South Asia being other than democracies. The South Asian countries have always looked at the rest of the world for economic interaction rather than within the region. However, India with its relatively more diversified economy is now looking east with greater focus and attention to consolidate a process that was initiated in the 1990s with its economic liberalization. In the case of India-Bhutan and India-Nepal, heterogeneity of political regimes notwithstanding, to a large extent geography has contributed to shaping economic relations. India having attempted and not succeeded to revive the South Asian regionalism and South Asian Association for Regional Cooperation (SAARC) through its positive overtures to Pakistan and regional initiatives has now realigned its neighbourhood policy towards subregional cooperation.