Comments on “South Asia's Conundrum: Turning Potential into Sustained Progress”

Abstract

Kathuria (2025) presents what he labels as South Asia's conundrum, namely, how to turn the region's potential into sustained progress. To answer this question, he focuses on why South Asia is punching well below its weight. Several factors covering many areas are identified to explain South Asia's economic situation including macroeconomic instability, protectionist trade policies, inability of the countries to reap the benefit of the demographic dividend, quality of human capital, and few other factors. Drawing on this analysis, Kathuria, however, does not directly offer a resolution to the conundrum he presents. Instead, it is implied—indeed left to the reader to conclude—that by reversing the negative trends listed would South Asia be able to realize its potential. Kathuria (2025) is loudly silent on the question of how South Asian countries will reverse the negative trends that are holding back the welfare of close to 2 billion people.

Take for example the case of Pakistan. Kathuria points out to an astonishing fact: Pakistan has so far sought an International Monetary Fund bailout 24 times—more than any other country in South Asia and even more than Argentina's 22 bailouts. That Pakistan must stabilize its macroeconomy is an understatement. Which factors will allow this turnaround to happen, and which will ensure that any stability secured will be sustained is the story that needs desperate analysis. Similarly, Kathuria refers to the challenge of both the quality and the quantity of human capital across South Asia—for example, low learning-adjusted years of schooling and low female labor force participation—suggesting these two factors also are contributing to the low economic attainment of the population. These points have been well documented in the literature. Kathuria, however, does not extend his analysis to explain how the trends could be reversed.

The difficulty of presenting a set of solutions or mapping how South Asia could address the development challenges it faces is understandable. Beyond listing potential technocratic options, a credible analysis of the solution path would need to identify the political economy factors that could potentially enable South Asia to address the challenges listed in Kathuria (2025). Such an analysis would require a different methodology and approach than one adopted by Kathuria. To address the issue Kathuria so aptly placed in the title of his paper, however, requires a political economy lens. Kathuria refers to certain aspects of political economy—for example, the linkage of the state with crony capitalists and business oligarchs—but falls short of presenting the political economy of policy reforms.

Take the issue of stunting, another issue well documented in the literature. Kathuria correctly suggests that this persistent problem in the region represents a “South Asia Enigma.” Framing the topic in such a bold way requires that an analysis be provided for why South Asia is trapped in this low-level equilibrium and what will allow for a turn around. India over the last several years introduced and implemented the world's boldest sanitation program at a scale and pace never attempted before. The objective was to address several poverty-related issues including stunting. This story from India by itself offers a relevant case study to offer lessons on how political economy factors can determine the outcome of policy measures meant to address development challenges.

Trade policy discussion in Kathuria (2025) is another area that would have benefitted from a deeper analysis. Kathuria documents the rise of protection across South Asia by drawing on various measurements including trends in nominal protection which show the increases in both tariffs and “para-tariffs.” He suggests that it reflects South Asia's “hesitancy about globalization.” Given Kathuria's excellent work on trade policy, the paper would have benefitted from his assessment of possible trade regimes different South Asian countries could adopt in the context of what is happening to global markets today—deglobalization, rising protection, reshoring, economic changes in China, rise of the service sector and other factors. Importantly, Kathuria could have provided an analysis of the political economy factors within and outside the South Asian countries that are determining the trade regimes adopted by the different countries and suggest which factors could influence this political economy and the types of policies that may be ultimately adopted.

Kathuria could have expanded his analysis by focusing on two sectors and explore the possible development pathways Governments in South Asia could follow and analyze the political economy factors which may determine which policy path may ultimately prevail. In the process, Kathuria would have been able to opine on whether the South Asia will realize it economic potential. Given his past work on trade, Kathuria might have wished to concentrate on the trade sector and include an analysis on regional trade in South Asia.

There are two further options for expanding the paper. After discussing the challenges as laid out currently, it would have been useful if Kathuria had ranked the challenges in terms of impact and feasibility of reform and explain his reasoning. Second, alongside the challenges, Kathruai could have offered an analysis of the opportunities that South Asia is facing. Currently, Kathuria (2025) makes a valiant effort to identify some opportunities while discussing many challenges. Readers may well be left with a sense that there are fewer opportunities than challenges.

Ultimately, it is not an easy task to answer the ambitious question Kathuria raises within the limits of a paper of short length. The countries in the region are very diverse in terms of size, endowments, and sociopolitical situations. They are at different stages of economic development. To paraphrase the World Bank's VP for South Asia, “The region's progress is akin to that of mountaineers at the foothills of the Himalayas. Some have barely left the base camp. Others are moving at a brisk pace but still in low altitude. All still have a long way to go. And the path will get more difficult ahead.” I agree with the first part of the message about the long climb and that the distance is different for different countries. I am not sure, though, that it would necessarily get more difficult ahead. Leapfrogging is possible: China did it on its own; South Korea did it with help from others. Can South Asia leapfrog?

Even as the papers of this conference are being prepared for publication, Bangladesh has just entered a major political economy crisis. Following on the heels of the Sri Lanka crisis (with very different triggers), the case of Bangladesh suggests that analysts and researchers failed to understand the underlying fragility of the state. A collapse of the existing state was not predicted, especially given the sustained improvements in economic and social indicators consistently reported over the last decade. Now that it has happened, perhaps Bangladesh's case suggests that the real conundrum of South Asia is how the region's stakeholders will tackle its political economy ecosystem and make it pro-reform to ensure sustained progress.