Low-cost airline (LCC) entry; strong economic growth; increased foreign direct investment
(FDI) in domestic airlines; rising tourist numbers; brisk cargo trade; innovative IT interventions;
a focus on expanding regional connections; newly built airports; robust business expansion; and
government policies that encourage growth all play a role.
Financial and economic meanings
Financial capital: Money used for business operations, investment, or to purchase assets like
machinery and equipment.
Physical capital: Goods used to create other goods and services, such as a factory or a
company's equipment.
Human capital: The skills, knowledge, and health of a workforce that contribute to productivity.
Net worth: For a business, it can mean its total net worth or book value.
Governmental and geographical meanings
The capital city: The principal city of a country, state, or province, often where the government
is located.
Political capital: The ability to influence political decisions.
Other meanings
Capital letter: A letter of the alphabet in its large or uppercase form, used at the beginning of
sentences and proper nouns.
Capital of a column: The distinctively treated upper end of a column or pier in architecture.
Components
Equity: Ownership funds raised by selling shares of stock. This can include common stock,
retained earnings, and preferred stock.
Debt: Borrowed funds that must be repaid, such as long-term loans.
Other financing: May also include convertible securities like convertible preferred stock or
convertible debt, which give the holder the option to convert them into common shares.
Importance
Financial health: It is crucial for determining a company's financial health and risk profile.
Cost of capital: A balanced structure can help minimize the overall cost of capital, which is the
weighted average cost of debt and equity (WACC).
Valuation: It impacts the company's valuation and ability to fund growth initiatives.
Risk management: Striking the right balance helps manage the company's risk exposure.
Table 1: Trade Openness (Export and Import as per cent of GDP) in SAARC Countries
Country/ 1960 1970 1980 1990 2000 2008 2015 2019
Region
Afghanistan 11.15 21.72 --- --- --- --- --- ---
Bangladesh 19.30 20.82 23.37 18.96 29.32 42.62 42.083 36.75
Bhutan --- --- 51.34 57.48 80.35 109.4 102.1 84.35
India 11.29 7.66 15.38 15.50 26.90 53.36 41.92 39.55
Maldives --- --- 358.66 168.08 --- --- --- 146.9
Nepal --- 13.20 30.27 32.18 55.71 46.03 53.09 54.92
Pakistan 20.39 17.96 35.89 35.03 25.36 35.59 27.65 30.43
SriLanka 62.88 54.05 87.01 68.24 88.63 63.36 49.55 52.37
South Asia 13.97 10.76 20.14 19.23 29.33 42.62 42.08 39.09
Source: The World Development Indicators, World Bank Report 2019
Within the SAARC zone, there are significant differences. The Maldives, for example, is heavily
reliant on the external market, with a trade openness ratio of 146.9 percent, whereas Pakistan
is the least open country in the SAARC region. Since India has such a large domestic market,
trade accounts for a much smaller percentage of GDP, particularly when compared to East Asian
economies, which are small and rely heavily on trade for growth. The majority of the countries
are reasonably trade-friendly. Bangladesh, Bhutan, India, and the Maldives all have higher
trade-to-GDP ratios. However, it was strong for Sri Lanka at one point but has since decreased.
With greater global economic integration, the external economic climate has a much greater
impact on these economies than before. Overall if the trend of trade openness is analysed for
the whole South Asia region than it has increase from 13.97% to 39.09% but is far below from
57.46% trade openness ratio of East Asia and Pacific region.
Table 2: Share of SAARC Region in World Merchandise Exports (%)
Country 1960 1970 1980 1990 2000 2008 2015 2019
Afghanistan 0.04 0.03 0.03 0.01 0.002 0.003 0.003 0.005
Bangladesh --- --- 0.04 0.05 0.1 0.09 0.19 0.21
Bhutan --- --- 0.001 0.002 0.002 0.003 0.003 0.003
India 1.02 0.63 0.42 0.51 0.65 1.21 1.62 1.71
Maldives 0.91 0.001 0.000 0.002 0.002 0.002 0.001 0.002
Nepal 0.013 0.013 0.004 0.006 0.012 0.006 0.004 0.005
Pakistan 0.307 0.141 0.128 0.160 0.140 0.126 0.133 0.123
Sri Lanka 0.295 0.107 0.052 0.055 0.084 0.052 0.064 0.063
Source: UNCTAD Report 2020
Table 3: Share of SAARC Region in World Merchandise Import (%)
Country 1960 1970 1980 1990 2000 2008 2015 2019
Afghanistan 0.063 0.035 0.040 0.026 0.018 0.018 0.046 0.038
Bangladesh --- --- 0.124 0.100 0.133 0.145 0.251 0.307
Bhutan --- --- 0.002 0.002 0.003 0.003 0.006 0.005
India 1.672 0.643 0.711 0.653 0.774 1.949 2.357 2.523
Maldives 0.003 0.001 0.001 0.004 0.006 0.008 0.011 0.015
Nepal 0.028 0.023 0.016 0.019 0.024 0.022 0.040 0.064
Pakistan 0.060 0.235 0.256 0.204 0.163 0.257 0.264 0.261
Sri Lanka 0.300 0.117 0.097 0.074 0.094 0.085 0.113 0.103
The Merchandise trade analysis of SAARC nations individual share in total world exports and
imports shows wide fluctuation. India acquires a major share in export and imports. During
2019 the share of India in world merchandise exports was 1.71% as against 1.02% in 1960 while
imports grew during the same period from 1.67% to 2.52%. Afghanistan has the least share and
it has shown a sharp decline in imports as well as exports. Bangladesh shows a gradual
improvement in export share from 0.04% in 1980 to 0.21% in 2019 while imports of Bangladesh
have also increased from 0.124% to 0.307%. Similarly, there has been improvement in
merchandise export and import share for Bhutan. Export share of Pakistan, Sri Lanka, Maldives
and Nepal have declined.
Table 4: Share of SAARC Region in World Services Exports
Country 2005 2007 2009 2011 2013 2015 2017 2019
Afghanistan --- --- 0.047 0.058 0.018 0.017 0.007 0.011
Bangladesh 0.056 0.054 0.055 0.055 0.061 0.065 0.070 0.10
Bhutan 0.002 0.002 0.002 0.002 0.003 0.003 0.003 0.002
India 1.949 2.394 2.561 3.102 3.048 3.124 3.354 3.489
Maldives 0.012 0.044 0.043 0.047 0.053 0.058 0.054 0.056
Nepal 0.014 0.014 0.019 0.019 0.024 0.029 0.029 0.026
Pakistan 0.137 0.103 0.109 0.114 0.101 0.118 0.104 0.088
Sri Lanka 0.058 0.049 0.052 0.069 0.096 0.128 0.140 0.122
Source: UNCTAD Report 2020
Table 5: Share of SAARC Region in World Services Imports
Country 2005 2007 2009 2011 2013 2015 2017 2019
Afghanistan -- -- 0.024 0.036 0.031 0.024 0.023 0.022
Bangladesh 0.090 0.088 0.096 0.121 0.138 0.158 0.160 0.167
Bhutan 0.005 0.003 0.003 0.004 0.004 0.004 0.004 0.004
India 2.311 2.605 2.271 2.882 2.674 2.657 2.915 3.075
Maldives 0.008 0.009 0.011 0.013 0.015 0.022 0.024 0.023
Nepal 0.017 0.021 0.024 0.018 0.021 0.025 0.031 0.030
Pakistan 0.289 0.256 0.187 0.188 0.168 0.180 0.204 0.160
Sri Lanka 0.110 0.104 0.097 0.134 0.112 0.122 0.123 0.114
Source: UNCTAD Report 2020
The services trade analysis of SAARC nations individual share in world total imports and exports
shows wide fluctuations. India, Nepal, Bangladesh, Maldives and Sri Lanka witnessed an
increase in their share of services exports in the world total from 2005 to 2019. India witnessed
robust growth in services export share from 1.949% to 3.489% which is highest among SAARC
Nations. Pakistan, Bhutan and Afghanistan on the other hand witnessed decline in their share of
services exports in the world total. As far as share in imports of services in world total is
concerned, Bangladesh, India, Maldives, Nepal and Sri Lanka have witnessed an increase in
imports share in which major increase has been in India. On the other hand, there has been a
decline in services imports shared in Pakistan, Afghanistan and Bhutan.
Table 6: Ranking of five major Export Partners of SAARC region, 2019
Table 7: Ranking of five major Import Partners of SAARC Nations,2019
Partner→ Rank 1 Rank 2 Rank 3 Rank 4 Rank 5
Reporter↓
Afghanistan Iran (1245.56) China(1156.6 Pakistan(1058 Kazakhstan(5 Uzbekistan(43
9) .01) 14.61) 3.80)
Bangladesh China India(6936.47 Special Singapore(25 US(1946.83)
(13265.78) ) category(3617 92.77)
.08)
Bhutan India Singapore(24. Thailand(20.5 China(17.90) Japan(10.74)
(1154.22) 27) 5)
India China US(34951) UAE(30283.3 Saudi Arab Iraq(22070.23
(68344.55) 2) (26996.48) )
Maldives UAE(543.35) China(469.42) Singapore(35 India(290.35) Malaysia(191.
4.53) 45)
Nepal India China(1895.7 Canada(316.5 UAE(213.41) US (192.89)
(8474.75) 6) 4)
Pakistan China(12380. UAE(6317.32 US(2584.90) Saudi Arab Indonesia(222
78) ) (2449.62) 1.03)
Sri Lanka China(4187.9 India(3461.21 Singapore(18 Japan(1616.7 UAE(1134.65
9) ) 36.75) 7) )
Note: Figures in Parentheses indicates trade value in Million, US Dollar
Source: Direction of Trade Statistics, IMF 2019
As far as Direction of Trade is concerned, UAE, US, China, Singapore and Saudi Arab are the
major countries to which SAARC nations are having Trade relations. However, Bhutan and Nepal
majorly trade within the SAARC region with India. Except for these two countries, all other
South Asian countries are involved with a very insignificant amount of trade within the region.
India also has trade relations with Sri Lanka and Afghanistan.
India also witnesses the highest volume of export and Import in SAARC Nations. Major Exports
of SAARC nations go to the US while the SAARC nations are majorly dependent on China for
imports.
4. Trend in Intra-Regional Trade in South Asia
In comparison to other Asian regions, such as ASEAN, intra-regional trade in South Asia is
relatively poor. South Asian countries mainly trade with countries outside of the country. With
the announcement of the (SAPTA) SAARC Preferential Trading Agreement in the mid-1990s,
SAARC gained traction. Since its inception at the turn of the millennium, the South Asian Free
Trade Region (SAFTA) has been performing admirably (Mohanty and Chaturvedi, 2006). In 2019,
intra-regional trade accounted for just 5.62 percent of South Asia's total foreign trade,
compared to 22.33% for ASEAN member countries.
Table 8: Trend in Intra-Regional Group Trade (%)
Regio 1990 1995 2000 2003 2005 2008 2012 2015 2017 2019
nal
group
Europ 59 59.48 58.92 61.28 60.62 60.37 57.44 58.92 59.84 59.72
ean
Union
EU 28 65.96 65.82 65.43 67.42 65.83 64.89 61.46 63.19 63.86 63.23
Euro 54.46 52.71 51.23 52.65 51.30 49.74 46.66 46.46 46.83 46.53
Zone
ASEA 18.10 21.85 23.78 24.44 24.85 24.84 24.26 23.39 22.41 22.33
N
ASEA 37.8 43.16 45.25 47.96 47.38 45.03 45.94 46.80 46.94 46.29
N +3
SAAR 2.71 4.23 4.49 5.81 5.47 4.51 4.29 5.57 5.66 5.62
C
APEC 67.95 71.99 72.73 71.40 69.81 65.27 66.61 69.54 69.88 69.33
Source: Asia Regional Integration Centre Database, ADB 2019
For individual countries, the intra-regional trade ratio varies from a low of 3.25 per cent for
India and 5.54 per cent for Pakistan to a high of 62.96 per cent for Nepal and 90.68 per cent for
Bhutan. Despite the development of regional groups, trade flows within the SAARC region are
weak. This may be due to the fact that SAARC economies have different market sizes than other
international groupings. Bhutan and Nepal, for example, cannot be India and Pakistan's primary
export destinations. As a result, the intra-SAARC trade potential is limited, especially for big
SAARC countries with small SAARC economies. Bhutan and Nepal, on the other hand, have
maintained close trade relations with India despite their limited economies. Nepal and Bhutan,
for example, import more than 50 percent of their imports from India, respectively, but only a
small portion of Indian exports.
4.1 Intra-regional trade share is the percentage of intra-regional trade to total trade (sum of
value of exports and import) of the region, calculated using trade data. It is calculated
Tii/Ti
where Tii is exports of region i to region i plus imports of region i from region i and Ti is total
exports of region i to the world plus total imports of region i from the world. A higher share
indicates a higher degree of dependency on regional trade.
Table 9: Intra-Regional Trade Share of SAARC’s Total Trade
Country 1990 1995 2000 2005 2008 2012 2015 2017 2019
Afghanistan 14.46 11.06 33.93 36.79 27.42 13.92 22.76 21.63 28.49
Bangladesh 5.98 12.84 7.98 10.34 11.57 10.52 9.83 10.8 9.63
Bhutan 9.70 73.2 67.7 82.29 86.59 86.35 86.25 87.62 90.68
India 1.57 2.72 2.48 2.79 2.31 2.23 3.15 3.09 3.25
Maldives 12.6 14.05 22.33 17.61 16.19 15.15 19.12 17.83 15.72
Nepal 11.88 14.84 39.06 61.71 62.6 66.6 61.2 61.03 62.96
Pakistan 2.72 2.35 3.55 6.18 7 7.88 7.87 6.25 5.54
Sri Lanka 5.65 7.81 7.51 17.27 17.41 18.02 18.73 18.95 16.15
Source: Asia Regional Integration Centre Database, ADB 2019
Intra-regional trade intensity index is the ratio of intra-regional trade share to the share
of world trade with the region, calculated using trade data. It is computed as:
(Tii/Ti)/(Ti/Tw)
Where Tii is exports of region i to region i plus imports of region i from region i; Ti is total
exports of region i to the world plus total imports of region i from the world; and Tw is total
world exports plus imports. It determines whether trade within the region is greater or smaller
than should be expected on the basis of the region's importance in world trade. An index of
more than one indicates that trade flow within the region is larger than expected given the
importance of the region in world trade.
The result on the basis of data available shows that the intraregional trade intensity index in
1990 was 2.72 and increased to 3.92 in 1995 as well in 2000 it remains 3.99. After 2000 it
started declining and reached as low as 1.69 and in 2019 it was 2.11 lower than 1990s level.
Export Growth: is the percentage change in the value of exports relative to the previous year.
Export Intensity index: is the ratio of a trading partner’s share to a country/region’s total exports
and the share of world exports going to the same trading partner. It is calculated as:
Xij = xij/Xiw
xwj/Xww