How Far Behind Are the South Asian Countries in Relation to East Asian

Abstract

We define as South Asian countries those countries that start with Iran and end with Bangladesh in Asia. Wethen use export statistics in terms of revealed comparative advantage (RCA) for 14 industrial sectors tomeasure distances of export capabilities for these countries in relation to the â Westernâ developed and EastAsian countries. Statistical methods such as multidimensional scaling and factor analysis are used for thispurpose. In parallel, a set of economic variables are used to compare the trade performance with economicdevelopment.The results are revealing for several reasons. First, although India is far ahead from the rest of the SouthAsian countries, all of them are still very behind in relation to both Western and East Asian countries. Exactdistances are measured in this respect (distance from the leaders of exports and economic developmentperformance). Second, most countries in South Asia are specialized in clothing, textiles, and leather, whereasseveral of tem are specialized as well in resources. Third, it seems that the current economic boom in EastAsian 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 setbackof South Asian countries and in order for them to catch up with the other booming Asian countries.JEL Classification: F14, F17, F19, O47, O49