What lessons can be learned for SAARC from ASEAN? Jayanthakumaran Kankesu1, Lee Shao-Wei2 1School of Economics, University of Wollongong, NSW, 2522 Tel: 61 02 4221 4029 kankesu@uow.edu.au 2School of Economics, University of Wollongong, NSW, 2522. swl67@uow.edu.au Online published on 31 January, 2012. Abstract This paper hypothesises that multilateralism and regionalism are complementary, and that regional income convergence is likely with a committed regionalism which often has links geographically and culturally and analyses the conditional convergence for founder members of ASEAN and SAARC countries by testing stochastic convergence and β-convergence. To supplement these results, this paper further explores the association between international trade, income per capita and regional income convergence by using Granger causality tests. It was found that global (non-discriminatory multilateral) reforms have had a greater impact on increasing trade for both trade blocs, and offer support for the convergence hypothesis in the ASEAN-5 countries. SAARC needs a more radical approach to integrate to promote regional strength (cultural values, low wages and low transport) in order to converge more successfully. Top Keywords ASEAN-5, SAARC-5, trade liberalisation, income convergence, structural breaks, causality. Top |