South Asia Association for Regional Cooperation

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The world economy is poised to enter into a historically important phase of structural change towards the end of the twentieth century. The transition towards this change is being driven by the economic forces of greater global interdependence on the one hand and the integration of regional markets on the other.

The effort to strengthen economic cooperation among the industrialized nations on the one hand and among the developing nations on the other is reflected in the emergence of regionalism as a potential instrument for changing the pattern of world trade. The basic objective of all these arrangements is to strengthen economic linkages based on closer economic cooperation. These developments have important implications for the SAARC countries.

The South Asia Association for Regional Cooperation (SAARC), consisting of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. It was established in December 1985. This paperwork is also on the detail of Saarc countries. The idea of SAARC was given by General Zia Ur Rehman of Bangladesh in the 1980s and in 1985, the first summit of the seven leaders of the region.

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For the last several years, regional cooperation among the SAARC countries has been confined to soft areas like cultural, sports, and youth activities. The agreement to establish a “SAARC preferential Trading Arrangements” system (SAPTA) in 1993, however, was perhaps the most important step in the direction of economic cooperation. The private business and entrepreneurs in the SAARC countries simultaneously made the significant move to establish the SAARC Chamber of Commerce and Industry with its headquarters in Karachi. These positive steps seem to have been induced by the ongoing deregulation and market-oriented economic reforms in all the member countries of the SAARC.


SAARC was founded in Dhaka on 8 December 1985. Its secretariat is based in Kathmandu, Nepal. It was established to promote socio-economic development, stability and welfare economics, and collective self-reliance within its member nations. SAARC Secretariat was established in Kathmandu on 16 January 1987 by Bangladeshi diplomat Abul Ahsan. Who was its first secretary General and was inaugurated by King Birendra Bir Bikram Shah of Nepal. Since its creation, its member nations have contributed to a total of fourteenth General Secretaries.

The head of the state of SAARC countries has been meeting almost regularly since 1985 to decide on policy issues and give direction for regional cooperation. In addition, meeting at the ministerial and official levels have been taking place frequently to decide on specific aspects of cooperation in different areas ranging from agriculture to communications, transport, and tourism. The SAARC countries have not been able to forge closer economic relations in the areas of industrial and trade policies. This is in sharp contrast to many other regional groupings which have attached greater importance to the role of regional economic cooperation in areas such as technology transfers, joint ventures, investment, and trade.

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Objective of SAARC

The main objective of various regional groupings, irrespective of whether these have formal or informal trading arrangements, is to increase intra-regional trade and at the same time also appropriate a large share of the gains arising out of the expansion of world trade. One of the main objectives of Saarc was to improve the standard of living of the population in the region through greater economic cooperation among the member countries

It is pertinent to note that all the SAARC countries have carried out major reforms in their economic policies in recent years with a view to meet the new challenges emerging out of increasing globalization.

Industrial sector:

These types of reforms, which are intended to enable the SAARC countries to integrate themselves with the global economy, can also help them to achieve economic cooperation among themselves. These reforms have provided a new set of opportunities for the private sector in these countries for forging closer industrial and commercial relations. While trade liberalization and expansion within the region are important, joint action promotes investment and stimulates agricultural and industrial production.


The strategy should serve to exploit the region’s complementarities in natural resources, technology, finance, managerial talent, and the market. This will make a vast scope for involvement in the field of the business sector, both public and private. There are well-established private sector companies in the SAARC region possessing financial, technological, and managerial capabilities.


The expansion of infrastructural facilities such as banking, insurance, telecommunication, and transport is vital for industrial development. Some of the SAARC countries may not be able to make significant progress on their own in expanding infrastructural facilities.


Many SAARC countries cannot be self-sufficient in educational facilities at higher levels like scientific, technical, and professional fields. The dependence on the higher educational institution in the industrialized countries can be reduced by making wider use of the scientific, technical, and management institutions already established in some of the SAARC countries.   

Natural sources of Energy:

The SAARC countries can cooperate with each other in undertaking joint efforts to protect the environment in several areas; in managing shared natural resources, especially river basins, coastal areas, forests, and wildlife in activities like in-shore and off-shore oil exploration, the management of exclusive economic zone and the prevention of desertification and in many other frontier areas of research such as biotechnology, renewable sources of energy, especially biomass, wind, and solar energy and the efficient use of energy in agriculture, industry, transport, and households.

Self Alliance:

The basic objective of SAARC countries is to promote the welfare of the people, In order to promote welfare with the people, the state must go for promoting of self alliances and create alliances with states to strengthen collective self-reliance among countries.


  • The first principle is to ensure sovereignty and territory in the SAARC.
  • No comprise on mutual cooperation.
  • To promote and create Mutual cooperation within the SAARC countries.
  • All the decisions within the SAARC countries were taken Anonymously

Structure of SAARC

The structure of SAARC is based on five stages

  1. Summit conference

The meeting of the head of the state is the highest decision-making authority under SAARC. Summits are usually by a member state in Alphabetical order. The member state hosting the summit assumes the chair of the Association.

The key outcome of a SAARC summit is a Declaration. It contains decisions and directives of the leaders to strengthen and regional cooperation. The declaration is adopted by the leaders at the concluding session of a summit. The summits also consider and approve reports of the council of the minister and ministerial meeting. In the summit, policy statements on regional cooperation under SAARC are made by the head of the state. The summit is also addressed by the Secretary-General. The summit is held once a year or more than one time in a year in the case of an emergency.

  1. Council of Minister

The Council of members comprises the minister of foreign minister. In Article 5 of the Charter, the council undertakes:

  • Formulation of policies of the association,
  • Review of progress of cooperation under SAARC,
  • Decision on new areas of cooperation,
  • Establishment of the additional mechanism under SAARC,
  • Decision on other matters of general interest to SAARC, if necessary.

The council reviews the progress of implementation of decisions taken in the conference. The reports of the council of ministers are submitted to the heads of state for approval. Since 1997, the council has also been meeting informally on the sideline of the US General assembly in New York.

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  1. Standing Committee

The standing committee comprises the foreign secretaries of the SAARC member state. The committee reports to the council of the ministers. They decide the place where to need for development. They are responsible for development in society, economy, etc.

  1. Technical Committee

The Technical Committees are the key bodies of SAARC. They are responsible for the check and balance and for the development and drafting of standards which are then ratified by European Standards Organizations.

  1. Secretariat General

The SAARC Secretariat was established in Kathmandu on 16 January 1987. The Secretariat General comes for the period of two years and the secretary-general came after the Alphabet of States. In the Secretariat, the secretary is combines of four members. H.E Esala Ruwan Weerakoon of Sri Lanka named office of the Secretary-General of the South Asian Association for Regional Cooperation on 01 March 2020.


It is observed that the SAARC countries have acquired different levels of economic structure. This reflects partly the levels of development achieved by the different countries. There is a sharp decline in the share of agriculture in total output, GDP between 1970 and 1992 in all the SAARC countries excepting Bhutan and Nepal. The share of the services sector has increased substantially during this period in most of the countries except Bhutan and Sri Lanka. The share of the industry sector, including manufacturing, had recorded only a modest increase in many SAARC countries. There are certain special features about the growth process in some of the SAARC countries. The commissioning of the Chukka hydroelectric project in Bhutan has contributed in a large measure to the rapid growth of the electricity and manufacturing sector.

The Quick rise in the contribution of the services sector in the Maldivian economy during the 1980s was propelled mainly by the rise in tourism. In Bangladesh, increased production of natural gas during the second half of the 1980s facilitated the growth in the power and manufacturing sectors.

It is observed that the change in the structure of output has not been accomplished by corresponding changes in the structure of employment, while the services sector has been an important source for absorption of surplus labor migrating from rural to urban areas. The services sector occupations in unorganized and informal sectors of the economy are characterized by low wages. Opportunities have to be provided for upgrading the skills of those employed in the services and informal sectors.

Poverty is a dominant characteristic of the SAARC region. Enlarging the opportunities for trade among the SAARC countries can be an effective instrument to stimulate economic growth which, in turn, would help in expanding employment opportunities and reducing poverty in the region.   

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The growth of world trade and the dynamism in the exports of the Asia-pacific countries have their implication for the expansion of trade in the SAARC region. It is observed that the ratio of exports to GDP has increased in almost all the SAARC countries during the 1980s. Exports efforts of SAARC countries, measured in terms of per capita exports are quite low as compared to many other developing countries in the Asia-pacific region. The improvement in the export performance could be explained by the changes in the structure of the exports. The share of primary commodity exports in total exports declined sharply in all the SAARC countries with a corresponding increase in the share of manufacture. The ratio of exports of manufacture has risen to above 70% in all countries except Bhutan and Maldives. Exports of textiles, especially readymade garments are now prominent in all the countries. It would be difficult to sustain this growth in the coming years due to the phased removal of the existing quota system under the Multi-Fiber Agreement.


It is stated that SAARC has not yet reached the level of other organizations like ASEAN or the EU in the terms of mutual cooperation and regional development. There the critics hold that the SAARC has failed to achieve desired progress due to an environment of dispute and mistrust. SAARC has been unable to implement its plan for regional welfare much of the population is in adverse socioeconomic conditions. The region is a second home to the four hundred million poor people which means nearly 30% of the region’s population lives below the poverty line.

SAARC is growing slowly due to political differences among its member states

  • Only the conflicts led to bilateral issues like the Kashmir problem b/w Pak and India.
  • Some of India’s neighbor fears that India intends to dominate them by influencing their politics and societies.


The basic theme of the SAARC was peace and prosperity but the member didn’t focus on their objectives. They have a lack of policy, enforcement power (legislation), lack of capacity building for policy formulation, behavioral and social issues, market barriers, and most importantly they are lack of financing. These are some major challenges faced by SAARC members. The basic reason behind SAARC is why Bangladeshi leader Mujeeb Ud Rehman made this forum because they want to promote peace and create development in the region but they can’t fulfill the point and this forum face failure.

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This write-up has been contributed by Afzaal Ahmed.

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