Fresh momentum for economic change pushes South Asia in new directions

With so many countries embarking on market-oriented economic reform, each new proclamation may receive less attention. Still, U.S. companies that fail to notice the changes under way in South Asia risk losing out to competitors as the doors open to trade, foreign investment, and technology. These changes are coming about as political and industrial leaders face up to the economic costs of central planning, protectionism, state-owned industries, and bureaucratic controls.

Sri Lanka had a head start on the others since it announced a market-oriented economic approach a decade ago. Yet, only recently has the privatization of government-owned entities developed momentum.

India also has modified its industrial and economic policies in recent years with the goal of decreasing government controls and giving private enterprise freeer rein. In practice, actual reforms were selective and real change was limited. When India's new government announced new industrial, trade, and foreign investment policies last summer, experience seemed to warrant a certain skepticism. Was this the real thing or another worthy effort likely to be blunted by vested interests and resistance to change? With the experience of the past six months, it is becoming clear that a new era is dawning. Already, the new policies are creating a more open and competitive Indian economy at remarkable speed.

A year ago in Pakistan, Prime Minister Nawaz Sharif announced a comprehensive reform for privatization of government-owned industries, bnaks, and utilities; deregulation of industry; and liberalization of foreign exchange and import regimes. Once again, skeptics wondered how much would be achieved given the magnitude of the task. While the pace of privatizations may not have met early targets, the continuing sale of public sector units shows momentum and commitment.

During 1991, Bangladesh also broke new ground with its first democratically-elected government and a new industrial policy giving more scope to private enterprise and market forces.

Last year, Nepal adopted a new Constitution and held its first democratic elections. Its new government has now begun to devote attention to developing economic policies to spur economic growth.

After years of rejecting policies that underpinned the success of Asia's "tigers" and that are being adopted in Eastern Europe and Latin America today, South Asian governments are taking steps to join the economic mainstream.

Naturally, old attitudes and bureaucratic obstacles won't disappear immediately. Still, the handwriting is on the wall. And enough of the new, especially a new welcome to foreign investment and technology, is already in place to warrant new attitudes toward the region. Continued attachment to an old vision of South Asia is likely to blind us to new opportunities emerging in this huge market. The articles in this issue of Business America look at the new policies and trends that are putting a fresh face on each of the countries in the region.

COPYRIGHT 1992 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group