The growth path of the South Asia Region (SAR) has improved dramatically since the 1980s. As compared with a miserly 3.7 percent growth per year between 1960 and 1980, average GDP growth climbed to around 6 percent
during 1980-2000 and further accelerated to 7 percent plus during 2000-09. South Asia is now the second fastest growing regional economy in the world (Figure 1). Private investment has boomed, supported by rising national saving rates. It now attracts global attention because of rapid growth, global outsourcing, and skill intensive service exports. South Asian economies also demonstrate resilience to external shocks. For example, South Asia has weathered the global financial crisis much better than most other regions. As a result, the downturn in South Asia’s average growth rate was much less severe and the recovery has been faster than in other regions.While the conflicts have varying elements of religious, ethnic and other social dimensions, irrespective of the source, internal and external conflicts are inter-linked. Important examples are:
Afghanistan-Pakistan conflict (Pashtun ethnicity spillover in internal Pakistan conflict);
India-Pakistan conflict (religious divide spilling over in internal conflicts in both countries)
India-Sri Lanka conflict (Tamil ethnicity spillover in Sri Lanka internal conflict)
Bangladesh-India conflict (religious divide at least on the surface contributing to internal political divide)
Nepal-India conflict (Nepali Pahadi (hilly areas) ethnic conflict with Madhesi Nepalis of Bihar origin in the terai region)
On the surface conflicts appear as related to language, ethnic or religious divide. Looking at the root causes, the conflicts are economic in nature. Important examples are:
Afghanistan-Pakistan conflict is rooted in a belief that NWFP and Baluchistan areas in Pakistan are neglected and left out, combined with the inflow of Afghan population seeking better economic opportunities.
Pakistan-India conflict over Kashmir is linked substantially to who controls the rich water and other natural resource base. At the same time, Kashmiris feel left out of the development process on both sides of the border.
Sri-Lanka-India conflict originates from Sri Lanka’s Tamil population getting alienated and perceives being discriminated against in economic and social opportunities.
Bangladesh-India conflict is fanned by a combination of parts of population in the North-eastern states of India feeling by-passed by India’s development and migration from Bangladesh’s border districts into India seeking better economic opportunities.
Nepal-India conflict is rooted in deep-seated perception that Nepal is not getting a good deal from its various cooperation agreements with India and restrictions on Nepal’s access to other neighboring countries.
Bhutan-Nepal conflict is linked to the ouster of Bhutanese inhabitants of Nepali origin from Bhutan and Nepal’s refusal to take them back, causing these people to be restricted to refugee camps in Nepal.
Conflict, Lagging Regions and Poverty
At the macroeconomic level, these economic conflicts are broadly correlated with South Asia’s lagging regions problem. These lagging regions, most of which are also beset with serious conflict, are either land-locked countries (Afghanistan and Nepal) or are border districts/states/provinces of Bangladesh, India, Pakistan and Sri Lanka. This is illustrated in Map 1 that shows the following results.
The landlocked countries of both Afghanistan and Nepal are among the lowest per capita income group in the region. Both are afflicted with serious conflict.
Out of 14 states of India that have borders with neighbors, 12 have per capita income levels that are at or below the national average (Arunachal Pradesh, Assam, Meghalaya, Mizoram, Nagaland, Tripura, Manipur, West Bengal, Bihar, Uttar Pradesh, Jammu and Kashmir, and Rajasthan). The only exceptions are Punjab and Gujarat. The 7 sisters of Eastern India, Bihar, UP, and Jammu and Kashmir are also conflict prone regions of India.
In Pakistan, per capita income is lower than average in the border provinces of North-West Frontier, Balochistan, rural Sindh and the Kashmir part of Pakistan. As in the case of India, Pakistan’s Punjab is an exception. Similarly, urban Sindh is richer than the national average because of the dominance of the port city of Karachi. These border areas are hotbeds of serious regional conflicts.
In Bangladesh, the border districts tend to have lower than average per capita income. The border districts of Bangladesh on the Eastern side of India (the 7 sisters) are a part of the conflict region with India.
