Regional Cooperation and Integration through Cross-Border Infrastructure Development in South Asia: Impact on Poverty

The largest concentration of the world's poor, estimated at around 40%, lives in South Asia. Although impressive economic growth in the region in recent years has decreased poverty levels considerably, the number of people living in poverty remains high and recent global financial and economic turmoil has slowed growth and threatens to reverse gains. Yet the crisis also provides an opportunity to boost intraregional trade through greater cooperation and integration to compensate for the reduced demand from developed countries. Regional integration can increase the region's capacity to connect with global production networks and participate in the global economy with greater efficiency.

Apart from its impact on growth and development through greater integration, crossborder or regional infrastructure, by increasing mutual dependence, could reduce the likelihood of regional conflict. Such investments involve coordination and cooperation between two or more countries either through bilateral agreements or through regional institutions such as SAARC.

For the purposes of this study, the role of cross-border infrastructure investments in reducing poverty in the region has been increasingly recognized and emphasized in recent years (Kuroda 2006, World Bank 2006). The objective here, therefore, is to identify the links between cross-border infrastructural development and poverty reduction. If it is demonstrated that the potential benefits to growth and poverty reduction are large, faster progress can be expected in regional cooperation and integration (RCI), resulting in the setting aside of political differences.