How Far Behind Are the South Asian Countries in Relation to East Asian Countries? Some Trade and Economic Development Considerations

We define as South Asian countries those countries that start with Iran and end with Bangladesh in Asia. We then use export statistics in terms of revealed comparative advantage (RCA) for 14 industrial sectors to measure distances of export capabilities for these countries in relation to the “Western” developed and East Asian countries. Statistical methods such as multidimensional scaling and factor analysis are used for this purpose. In parallel, a set of economic variables are used to compare the trade performance with economic development. The results are revealing for several reasons. First, although India is far ahead from the rest of the South Asian countries, all of them are still very behind in relation to both Western and East Asian countries. Exact distances are measured in this respect (distance from the leaders of exports and economic development performance). Second, most countries in South Asia are specialized in clothing, textiles, and leather, whereas several of tem are specialized as well in resources. Third, it seems that the current economic boom in East Asian countries does not affect the economies of South Asia as much as expected. In the light of the these results, some policies are recommended in order to alleviate the relative setback of South Asian countries and in order for them to catch up with the other booming Asian countries.