Is There Any Potential in Service Trade of South Asia?

Abstract

Like many developing economies, services have emerged as crucial economic activities in South Asia; yet, this cannot increase the rapid growth in the intra-trade in the region. To find out the service trade potential in the region, this article uses revealed comparative advantage indices to assess the comparative advantage and the indicative trade potential of different South Asian countries in various services sub-sectors. The study reveals that there stands complementarities in the trade of services as Pakistan and Sri Lanka have a competitive advantage in Transport Services, while India has a competitive advantage in Computer and Information Services and Other Business Services. In travel services, Maldives and Nepal possess competitiveness, while Bangladesh in Government Services. The study reveals that competitive services have not explored the potential yet. India being the most robust economy of the region must provide a pivotal role in making negotiations and commitments under the South Asian Association for Regional Cooperation (SAARC) Agreement on Trade in Services (SATIS), particularly in competitive services. JEL: F1, G2, F5