Introduction and Overview

Abstract

East and South Asia followed different economic strategies in the 1970s and 1980s. East Asia adopted outward-oriented strategies and witnessed remarkable economic prosperity while inward- oriented South Asia largely stagnated.¹ Not surprisingly, prior to 1990, East and South Asian economies were relatively isolated from one another and there was little talk of pan-Asian economic integration. The only trade agreement that covered the two subregions was the Bangkok Agreement signed in 1975 that included Bangladesh, India, Sri Lanka, Lao People’s Democratic Republic (Lao PDR), Republic of Korea (henceforth Korea), and People’s Republic of China (PRC) (see Box 1.1). There was very little bilateral trade and investment among these countries. The adoption of a “Look East” Policy in India in 1991 marked the start of a new era in East and South Asia economic relations. Since then, there has been heightened policy interest in the process of pan-Asian integration, and particular interest in evolving economic relationships between the two subregions.