South Asia's Take-Off

The Region Turns To Market Economics

CHANGING ECONOMIC and political systems in India, Pakistan, Bangladesh, Nepal and Sri Lanka are providing the United States with opportunities to reinvigorate diplomatic and commercial relations in south Asia. Despite democratic and market reforms in the subcontinent, U.S. government and business leaders still place a low priority on the region. Further, most attention devoted to the subcontinent focuses on nuclear or strategic issues, which, while certainly important, are not the only U.S. interests in the region.

In recent years India’s democracy has survived ongoing separatist and communal violence and Rajiv Gandhi’s assassination; Pakistan has held two national elections and, while the civilian democracy is still tenuous, it remains intact; Bangladesh overthrew its military leadership and established a parliamentary democracy; and Nepal has created a constitutional monarchy and held legislative elections.

On the economic side, governments in south Asia have realized that insular, state-run economies have not achieved the levels of growth needed to catapult their large populations out of poverty. Instead these policies isolated their countries and denied them the benefits of international trade and investment. While isolationism may have seemed an attractive course, political and business leaders across the region now acknowledge the need to integrate into the global economy.

In the past the United States had supported autocratic regimes in south Asia, primarily for strategic reasons. In today’s post-Cold War environment Washington is largely neglecting the region even though it now better meets American democratic standards. Similarly, the United States needs to do more to ensure that the region’s economic liberalization is irreversible and that there is no backsliding into the tried and failed socialist past. U.S. policymakers do not fully appreciate the potential impact of south Asian trends on America’s long-term economic interests.

Struggle to Sustain Fragile Democracies

DESPITE EXTRAORDINARY challenges, India’s democratic institutions have functioned relatively well since the country achieved statehood in 1947. Having faced partition, numerous internal separatist movements and other militant activities within its borders, India’s democracy has endured.