South Asian economies in the global trading system

South Asia, comprising Bangladesh, India, Pakistan and Sri Lanka, with one-fifth of the global population, is relatively insignificant in world trade as well as in regional trade. Using conventional trade ratios, this paper finds that there is potential for trade expansion within the region and, contrary to the common perception, the commodity structures of all countries are complementary to eachother. Bangladesh and Sri Lanka have the highest level of complementarity in their trade relative to any other pair, while trade complementarity between Pakistan and India is less than that of any other pair of countries. India's exportables are complementary to importables of the other three countries. This paper suggests that if the potential complementarities in traded products are fully harnessed and regional trade and industrial activities are coordinated, both intra and extra-regional trade will increase