Pakistan Institute of Development Economics, Islamabad

Prospects of Economic Integration among the ECO Countries

Author(s): Pervez Tahir
Source: The Pakistan Development Review, Vol. 43, No. 4, Papers and Proceedings PART II
Twentieth Annual General Meeting and Conference of the Pakistan Society of Development
Economists Islamabad, January 10-12, 2005 (Winter 2004), pp. 913-923
Published by: Pakistan Institute of Development Economics, Islamabad
Stable URL: http://www.jstor.org/stable/41261033
Accessed: 11-05-2015 15:44 UTC
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Review
ThePakistanDevelopment
43 : 4 PartII (Winter2004) pp. 913-923

ProspectsofEconomicIntegration
amongtheECO Countries
Pervez Taher
INTRODUCTION
of a
The idea thatthecollectiveregionaleconomicprospectsof thecountries
the attention
of
regionexceed the sum of theirindividualprospectshas attracted
politiciansand economistssincetheWorldWarII. Itsbestknownexamplehas been
theTreatyof Rome in theEuro-Mediterranean
region,whichhas nearlyhalfof the
in
rules allowed the regionaltrade
GATT
trade
regional
agreements operation.
freer
tradewithout
as
so
raisingtrade
intraregional
agreements long theypromoted
seen as
These
have
indeed
been
barriersfor the thirdcountries.
agreements
Withtheadventof theWTO
freetradeinitiatives.
to themultilateral
complementary
are
and the onset of globalisation,the countriescategorisedas fast integrators
as slowintegrators.
to havebetterprospectsthanthosecategorised
considered
Regional cooperationamong developingcountrieshas increasinglybeen
therationalefor
tool foreconomicdevelopment.
advocatedas a strategic
Generally,
regionalcooperationis notmerelyeconomic;it is also politicaland socio-cultural.
economiesof scale in
The economiccase is basedon smallsize ofdomesticmarkets,
of
the
underutilised
and
utilisation
potentialin termsof
production,
specialisation,
natural
resources.
and
human, technological
Through regional cooperation,
but also to
developingcountriesare enablednotonlyto expandexistingindustries
establishnew ones based on dynamiccomparative
advantagewhichhelpsthemto
theirindustrial
base.
diversify
The messagewas notlostouton less developedcountries,
rising
experiencing
desiresof catchingup withthedeveloped
of theirpeople and nurturing
expectations
countries.In thisregion,Pakistan,Iran and Turkeyenteredintoa groupingcalled
(RCD) in 1964.In itsfifteen
years(1964-79)
RegionalCooperationforDevelopment
Pervez Tahir is Chief Economistof the PlanningCommission,Governmentof Pakistan,
Islamabad.
Author'sNote: The authorhas writtenthis articlein his personal,not official,capacity.He
Trade
usefulassistanceprovidedby Mr Rab Nawaz Abbasi,AssistantChief,International
acknowledges
thisarticlein his personal,not
and FinanceSectionof thePlanningCommission.The authorhas written
official,
capacity.

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914

PervezTahir

theintraregional
tradeneverexceededthepre-RCDlevelof less than2
ofexistence,
theECO, is
of
their
GDPs.
EconomicCooperationOrganisation,
aggregate
percent
inherits
all itsproblems.
successorto theRCD and,unfortunately,
THEORY AND RULES
The orthodoxtheoryof economicintegration
[Viner(1950); Meade (1955);
determines
its
the
relative
oftradecreation
gainsbyjudging
strengths
Lipsey(1957)]
from
economic
andtradediversion
effects
arising
integration.
Tradecreationrefersto a shiftfromhigh-cost
domesticproductsto thelowin an economicunionor regionalbloc. This
costproductsof themembercountries
shiftinvolvesa production
effectand a consumption
effect.The former
saves the
realcostofdomesticproduction
to
reduction
in
the
of
and
increase
owing
production
can produceat a lowercost,
in theimportof thosegoods whicha membercountry
whilethelatterenhancesconsumersatisfaction
becauseof increasedconsumption
of
at lowerpriceand wereproduceddomestically
thosegoodswhichare nowimported
athighercosts.
Trade diversionentailsa shiftin the source of importsfromlower-cost
externalsourcesto higher-cost
sourcesas a resultof economic
member-country
The
in thecostof imports
or
result
is
an
increase
due to the
integration cooperation.
shiftfromforeignto member-country
sourcesand a loss of consumers'surplus
fromthesubstitution
ofhigher-cost
resulting
goodsforlower-cost
goods.
and
Grubel-Lloyd(1975) show thatdifferential
technology humancapital
cause intra-industry
tradeeveniffactorinputrequirements
are identical.In thecase
of industries
to
countries
can
returns,
subject increasing
specialisein varietiesso as
toenterintointra-industry
trade[Krugman
(1981)].
In general,regionalcooperationin developingcountriesleads to dynamic
impactsembodiedin technicalchange and economic restructuring
pushed by
can
hands
to
as
an
see
comparative
join
advantage.They
globalisation
opportunity
rather
thana threat.
In theWTO era,facingup to newformsofprotectionism
suchas
environmental
and
social
a
duties,
standards,
anti-dumping
quality
presents challenge
whichis better
thanbydivisiveindividualism.
managedbya regionalbloc rather
Economicintegration
is generallyachievedthrough
an evolutionary
process
ofregionalcooperation.
The mostoutstanding
exampleis theEuropeanUnion(EU),
whichafterachievingnear-complete
economicunion,is seriouslydebatingpolitical
union.In theAmericas,themostimportant
is theNorthAmerica
regionalgrouping
FreeTradeArea(NAFTA). The Associationof SouthEast AsianNations(ASEAN)
is the most successfuleconomicgroupingin Asia. These groupingsare better
offeredby the rapid
positionedthanindividualcountriesto exploitopportunities
of theworldeconomy.UndertheWTO arrangements,
theseRegional
globalisation
are
viewed
as
to
multilateral
freetrade.
(RTAs)
TradingArrangements
complements
Underthe ArticleXXIV of GATT regionaleconomicintegration
are
agreements

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EconomieIntegration
ofECO Countries

9 {5

liberalisation
of tradeamongthecountriesin
providedthattheresulting
permissible
thegrouptakesplace without
the
tariffs
raising pre-existing
againstthirdcountries.
THE ECO REGION
The Economic CooperationOrganisation(ECO) is an inter-governmental
foundedin 1985 by Iran,Pakistanand Turkeyto promote
regionalorganisation,
economic,technicaland culturalcooperation
amongthememberstates.ECO is the
successororganisation
to RegionalCooperation
forDevelopment
(RCD), whichwas
functional
from1964 to 1979, and its basic charteris enshrinedin theTreatyof
Izmir,originallysignedin 1977. In 1992 it was expandedto includeseven new
- Afghanistan,
members
Turkmenistan
Kazakhstan,
Azerbaijan,
Kyrgyzstan,
Tajikistan,
and Uzbekistan.The originsof ECO have some similarity
to thoseof ASEAN, as
bothregionalbodies were the resultof geo-strategic
considerations
to whichan
economicdimensionwas added. The RCD/ECO had littleeconomicimpactbefore
its 1992 expansionand even thereafter.The Treatyof Izmir,whichis the basic
charter
ofECO, laysdownthefollowing
objectivesoftheECO.
- Promotionof sustainableeconomic developmentof memberstates and
oflivingandqualityof lifeofitspeople;
raisingthestandard
- Promotionof regionalcooperationin economic,social, cultural,technical
andscientific
fields;
- Progressive
removaloftradebarriers
andexpansionofintra-regional
trade;
- Developmentof transport
and communication
in themember
infrastructure
states;
- Humanresourcedevelopment;
- Development
oftheagricultural
andindustrial
as wellas humanand
potential
naturalresourcesoftheregion;
- Economicliberalisation
andprivatisation;
and
- Utilisation
ofregion'snaturalresources,
inparticular
energyresource.
The peopleof theregionare linkednotonlyby naturalgeographic
proximity
but also centuriesold historicaland culturalbonds. In pre-colonialtimes,trade
flowedfreelywithintheregion. Therewas also freemovement
of labour. The
onsetof colonialismdisruptedtheselinks,and the Soviet advanceisolatedthem
thereis no reason why
completely.As these stateshave regainedsovereignty,
traditional
culturallinks should not be reassertedand joint effortare made for
andcloserunderstanding
prosperity
amongthepeopleoftheregion.
With a total populationof about 380 million(6.1 percentof the world
thecombinedGDP of theECO countries
amountedto US$ 500 billion
population),
in 2003. This constituted
only 1.4 percentof theworldGDP. The regionis spread
overan area of about8 millionsquarekilometre,
twicethesize of EU. At present
the membercountriesproduceabout 6.8 percentof worldcrudeoil supplyand

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PervezTahir

916

absorbabout 3.7 percentof worldcrudeoil demand. The regionexportsmore

than45 percentof the oil it produces,up from40 percentduring1990s. The
regionis not only rich in naturalresourcesbut also in humancapital. Despite
beingbetterendowedin naturalresources,theeconomiesof theregionare facing
and poverty.Countrieslike
serious problemsof externaldebt, unemployment
Turkey,Iran and Kazakhstanwithper capita GNI of $ 2790, $ 2000 and $ 1780
respectivelyare the high-incomemember countries. Others like Pakistan,
Uzbekistan and Kyrgyz Republic with per capita GNI $ 470, 420, 330
is at a fairlylow level of per
are low incomecountries.Afghanistan
respectively
capita income(US$ 174). Some countrieshave a seriouspovertysituation.As
is small and in cases whereit is high,the
Table 1 indicates,theshareof industry
bulkof it is accountedforby oil and gas. A morerelevantindicatorforregional
in exports.Here only Pakistan and
cooperationis the share of manufactures
Turkey figureprominentlyalthoughthey too have a high concentrationin
textilesand clothing.
Table 1
ECO: KeyIndicators
Shareof
Externaldebt
Shareof
in Manufacturing
PresentValue Poverty
Industry
Below $ 1
GDP (%) in Exports(%) % ofGNI
2002
2003
2003
aDay%*
21
54
6
3.7
Azerbaijan
9
7
<2.0
Iran
37
80
<2.0
39
19
Kazakhstan
93
23
33
<2.0
KyrgyzRepublic
23
85
45
13.4
Pakistan
10.3
20
13
89
Tajikistan
22
<2.0
84
77
Turkey
44
12.1
Turkmenistan
7
22
Uzbekistan
38
21.8
Source: WorldDevelopment
Report2005.
Nearestavailablesurveyyear.
GNI
PerCapita
($)
2003
810
2000
1780
330
470
190
2790
1120
420

INTRAREGIONAL TRADE
exportsof the
Duringthefive-year
period1998-2002,thetotalmerchandise
ECO memberstatesreachedthe peak of US$ 94.6 billionin 2002. The region
contributed
1.54 percentand 1.65 percentof the worldmerchandise
exportsand
in 2003. In 2002, theintra-exports
in theECO regionaccounted
imports
respectively
for 5.4 percent.The rates of change in merchandise
exportsof ECO countries
in
1998
when
most
of
the
members
droppedsharply
experiencednegativeratesof

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EconomieIntegration
ofECO Countries

)'J

growthin theirmerchandiseexportsreflectingthe effectof the Asian crisis.

However,thefollowingyears(except2001) witnesseda strongrecoveryin export
whenmembercountries
thehighestaverageratesof change
performance
registered
in theirmerchandise
in
After
2002.
of theregion
1998,exportperformance
exports
deteriorated
again and experiencednegativeratesof growth(1.1 percent)in 2001,
affectedby the slowdown of world economyand the deterioration
in world
commodity
prices.
Table 2
ECO Trade*

Exports
Imports
TotalTradeVolume
Intra-trade
Ratio
(Percent)

1998
59.3
81.3
140.6

1999
68.7
75.4
144.1

2000
83.2
93.0
176.2

2001
82.3
84.9
167.2

2002
94.6
103.3
197.9

5.3

5.0

5.3

5.1

5.2

(BillionUS$)

2003
115.1
126.0
241.1
5.1

Source:WTO, International
TradeStatistics
2003.
notincluded.
Afghanistan

The economicrecovery
achievedbytheECO countries
as a groupaccelerated
in
2000
with
real
GDP
recorded
at 6.2 percent
significantly
average
growth
to
0.6
contraction
in
1999.
due
to
the
weakened
world
However,
compared
percent
economicactivityin late 2000 and during2001, combinedGDP of the ECO
countries'droppedto US$ 403.6 billionand real outputgrowthdeclinedto 1.1
ECO
percentin 2001, affectedby negativegrowth(7.5) in Turkey. Nevertheless,
countries
recoveredsignificantly
and real outputgrowthincreasedto 7.3 percentin
2002. The ECO countries'averagepercapitaGDP in 2001 and 2002 remainedat
US$ 1,111andUS$ 1,144respectively
(2.0 percent
owingto highpopulationgrowth
level,Afghanistan
during2001-2002)of theregion. At theindividualcountry
(US$
withthelowestGDP percapitain
174) andTajikistan(US$ 189) werethecountries
2002,whileTurkeywas thehighest(US$ 2,608) in thesameyear.
Effortshave been made by theECO memberstatesto promoteintra-trade.
have
takenstepsforimprovement
of regulatory
frameworks
and removalof
They
tariffand non-tariff
barriersin the region.The regionalintra-trade
situationis,
and the prospectsdo not seem verygood unless
however,far fromsatisfactory
backed by politicalwill of the memberstatesgain momentum.
privateinitiatives
Total intra-regional
tradevolumeof ECO region(excludingAfghanistan
data) in
2002 increasedto US$ 10.2 billionfromUS$ 8.6 billionin 2001. The intra-trade
ratioof theECO region(excludingAfghanistan
data) in 2002 likethepreviousyears
could notcrossthethreshold
of 6.0 percent.In fact,despitea highaveragerateof

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PervezTahir

918

growthin merchandiseexports(14.9 percent),theregion's share in totalmerchandise

exportsof the world increased by 0.2 percentagepoint over the previous year. This
means thatthe ECO countriescould not realise the potentialof intra-regionaltrade
reflectedin its economic complementarities.When compared to otherregionalblocs
like EU (61.7 percent), NAFTA (36.8 percent), ASEAN (23.31 percent), and
Mercosur (19 percent), as seen in Table 3, the situation is ratherdismal. The
InternationalTrade Centrein Geneva in a joint studywithECO Secretariatsuggests
that intra-regionaltrade should be far higher than it currentlyis. Econometric
"gravity" models, which show that in the case of countries for which data are
available, intra-ECO tradeis actuallyless thanwhatone would predictif factorssuch
as size, distance,relativeper capita income etc. are takenintoaccount.
Table 3
Share of Intra-tradein RTAs
Imports
2000
2003

1995

Exports
2000

2003

1995

EU(15)

64

62.4

61.9

65.2

60.3

61.7

NAFTA (3)

46

55.7

56.1

37.7

39.6

36.8

ASEAN (10)

25.5

24

23.3

18.8

23.5

23.3

CEFTA(8)

16.2

13

13.6

12.3

10.2

11.3

MERCOSUR (4)

20.5

21

11.9

18.1

19.8

19

ANDEAN (5)

12.2

8.9

9.4

12.9

13.8

14.7

RTAs (No. of Members)

As noted above, Regional Trade Agreementshave been one of the important

tools forregional economic cooperation. The globalisationhas, in many instances,
been achieved througha process of regional preferentialtrade agreementsand free
trade agreements. The European Union (EU), North America Free Trade Area
(NAFTA), the Association of South East Asian Nations (ASEAN) are some of the
most successful examples. At present some 215 regional trade agreementsand
bilateraltrade agreementsare operational. By 2007, some 300 such agreementsare
expected to be in force. Some 40 percent of global trade is currentlyconducted
withinexistingRTAs and BTAs (Bilateral Trade Agreements).
The success of intra-regionaltrade mainly depends on the countriesforming
an FTA (Free Trade Area) and allow the importsduty-freeor at a preferentialrate
fromthe member countries. The productsthat may not enjoy concessions can be
specified. However, the list should be small and must not contain the productsthat
are of export interestfor the member countries. If the sensitive list is large and

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EconomieIntegration
ofECO Countries

919

tradewillnot
of themembercountries,
includesmostof theitemsof exportinterest
thattheydo not
flourish. SimilarlyRules of Originshould be so formulated
trade. Moreoverthe anticonstrainthe growthof intra-regional
unnecessarily
measures,thoughnecessaryforfairtrade,shouldnotbe
dumpingandcountervailing
measures.
usedas protective
to followthepathin theECO regionhavenothad muchsuccess. A
Attempts
Tariffswas signed by the threeECO members(Iran,
Protocolon Preferential
started
PakistanandTurkey)in May 1991. Listsweredrawnup andimplementation
inMay 1993. However,thisProtocolcouldnotmakeanyheadwayas thelistsdrawn
tariff
was offered
wereverylimitedin natureand theproductson whichpreferential
werenottradedanda 10 percentmargincouldnothavemuchimpactanyway.
In July2003, ECO countriesalso concludeda Trade Agreement
knownas
is a majorstep towardsrealisationof the objectiveof
ECOTA. The Agreement
of Free TradeArea in ECO regionby
removalof tradebarriersand establishment
in termsof commodity
2015. It is comprehensive
coverageto be realisedover a
to a maximum
of 15 percenton
periodof 8 yearsby 2015 and willreducethetariff
memberstatesagreedto adopta
80 percentof thegoodstraded.The threefounding
fasttrackapproachforearlyimplementation
ofECOTA byreducingmaximum
tariff
to 10 percentwithin5 yearsinsteadof 8 years.
A High Level ExpertsGroupMeetingheld in Islamabadin March,2005
like
agreedon a protocolon "fasttrack"and also finalisedtheotherrelatedmatters
ECO Rules of Originand ECO anti-dumping
code, Investment
Agreementand
sensitivelistsof productsetc. The forthcoming
Ministerialmeetingof ECO Trade
Ministersis likelyto signtheFast TrackAgreement.The Agreement
whenmade
will
the
boost
trade
the
member
countries.
However,thereis
operational
among
needto keep thenegativelistto onlya limitednumberof productsand shouldnot
includethe productsof exportsinterestto membercountries.ECOTA will also
theoverallprocessof economicreformsin the region'seconomiesby
strengthen
a
more
having
dynamicimpact. It will serveas a counterbalance to regionalism
outsideof ECO, as most of the memberstatesin the regionare part of other
preferential
tradingaccords. WithoutECOTA this in itselfwould reduce intraregionaleconomicinteraction.The ECOTA could also lead to greaterinflowsof
FDI to theregionas the multinationals
perceivetheregionmoreas an integrated
wholerather
thanjust a groupof smallsegmented
countries
whichputstheregionat
a disadvantagerelativeto otherdevelopingregionspursuingeconomicintegration
accords. Besides removalof tariffs,
otherobstacleswill also have to be removed
whichcreateinefficiency
withoutany "tradeoff effects.These includeinefficient
and insufficient
telecommunication,
transportation,
bankingand insurancesystem,
transitfees,unreliableand insecuretransitroutes,time
highand discriminatory
visa procedures
forentrepreneurs,
customspractices,
consuming
lengthy
quantitative
restrictions
on imports,
for
certain
etc.
licensing
imports

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PervezTallir

920

PAKISTAN AND THE ECO

Table 4
Pakistan's TradewithECO Countries
(Million

Year
2000-01
2001-02
2002-03
2003-04

Exports
290.87
317.76
546.96
825.96

Imports
455.63
222.21
465.57
421.59

Total
746.50
539.97
1014.53
1247.55

u$;

Balance
-164.76
95.55
81.39
404.37

Source: FederalBureauofStatistics.

Trade figuresforfouryearsshow thatPakistan'sexportsto ECO countries

haveincreasedfromUS$ 290.87 millionin 2000-01to US$ 825.96 millionin year
2003-04showingan increaseof 184 percent.
decreasedfromUS$
However,imports
455 millionto US$ 421 millionduringthe same period. Exportsto Afghanistan
increasedfromUS$ 140.4millionin 2000-01toUS$ 492.87 millionduring2002-04,
theimportof gas
showingan increaseof 250 percent.Pakistanis also considering
fromTurkmenistan
andIran,andpowerfromTurkmenistan.
of
Afterthecompletion
GawadarPortandothermissingtransport
tradeis likelyto geta boost.
links,transit
REGIONAL CONNECTIVITY
Withoutan effective
moderntransportation
and communication
the
network,
of
trade
and
economic
That
is
cannot
be
realised.
expansion
whythe
integration
and Communication
has been identified
as an area of cooperation
Transport
among
the membercountries. This is particularly
because seven out of ten
important
memberstatesare land-lockedi.e. Afghanistan,
Azerbaijan,Kazakhstan,Kyrgyz
and
Turkmenistan.
The
location
of thesecountriescould be
Republic,Tajikistan
transit
traffic
links.
So
far
the
of theCentralAsian
exploitedbyfacilitating
potential
Countries
has notbeenrealisedprimarily
due to thesignificant
"economicdistance"
fromthe marketenduredby transporters
the region. The economic
throughout
distancecan be significantly
reducednotonlyby improving
physicalinfrastructure
butalso by simplifying
transitand clearanceprocedures,
to
providinginformation
stakeholders
andeliminating
corruption.
The ECO has been instrumental
in promotingcooperationin the fieldof
and
in
communication
the
transport
region. In this regard,five Ministerial
on
and
Communicationwere held. The mainachievements
meetings Transport
include the conclusion of a Transit Trade Agreement(TTA) and Transit
TransportFrameworkAgreement(TTFA). The TTFA was signedin 1998 on the
eve of FifthECO Summitand its 8 annexureswere adoptedin 2000. It is a
comprehensive
agreement,addressingall majorissues and challengesin related

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EconomeIntegration
ofECO Countries

92 1

fields including customs, trade facilitation,road, rail and inland water

transportation.The Agreementhas been signed by 9 statesand ratifiedby 5,
to become operational.Thereis a need to
whileit awaitsone more ratification
officialsas well as privatesectorwiththerequirements
familiariseGovernment
and operationof the TTFA and its annexures.The Agreementcan emergeas a
in full,
key driverforan efficienttransitsystemin the region. If implemented
the agreementwill integratethis economicallydevelopingbut geographically
landlockedregionwiththeglobal market.
ECO has carried out a numberof other projects to improve links.
of constraintson the
Preparationof Railway and Road Maps, identification
custombordercrossingpointsand commontariffpolicy are some of them.A
fromIstanbulto AlmatythroughIran. An
containertrainis runningfortnightly
international
passengertrainwas also startedfromAlmatyto Tehran. However
train
service
could notoperatedue to some technicalproblemsand high
regular
fees by some of thememberstates. The passengertraincan
transitcharges/visa
to Middle
link CentralAsian railwaynetworkto Iran and Turkeyand further
East and Europe. ECO is also workingon removingphysicalobstacles in the
of international
field of road transportwithinECO region and harmonisation
in most cases the memberstates are
road transportof goods. Unfortunately
facingmanytechnicalproblemsat borderpoints. Bordercustomauthoritiesare
not providedwith I.T. equipmentfor smoothcustom clearance, immigration
authoritiesare unawareof visa rules and thereis non-availability
of maps in
Englishor in Russian. In mostcases theworkinghoursare such thatthedrivers
and traffichave to wait forseveralhoursforprocessingtheirrequestsforentry.
ECO Secretariatis workingon a feasibilitystudyforremovalof physicaland
non-physicalbarrierson bordercrossingpoints. In this context,ECO is also
workingon anotherprojecti.e. Multi-modelTransportProjectwiththefinancial
supportof IDB and UNCTAD. There is long way to go to enjoy a modernand
efficient
and communication
network.
transport
A databank has been established on manufactureof products for
telecommunications
and postal technologiesavailable in the region. ECO is
actively promotingcooperationin energy,mineraland environment
among
memberstates. NESPAK has been selected for a feasibilitystudyon interconnectionand parallel functioning
of power systemsin the region. Islamic
Bank
will
Development
providefinancingforthis feasibilitystudy. The ECO
Secretariatis exploringfunds for anotherfeasibilityregardingroute of oil
pipeline.
willalso improvewiththeestablishment
ofECO Trade
Regionalconnectivity
andDevelopment
BankandECO Re-insurance
Company.Iran,TurkeyandPakistan
havealreadysignedandratified
to thiseffect.
agreements

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922

PervezTallir

OTHER AREAS OF COOPERATION

The economies of the region have the advantage of economic
besides theircultural,historical,religiousand geographical
complementarities
closenesswhichpave the way for economiccooperationbased on comparative
all countries.For exampleAzerbaijan,Iran,Kazakhstanand
advantagebenefiting
Turkmenistan
are oil/gasproducingand exportingcountrieswhile Pakistanand
countries.
The CentralAsianRepublicshavesignificant
Turkeyareoil/gasimporting
for
demandin Pakistanis growing
potential hydroelectric
power. Electricity
rapidly
and is boundto straindomesticsupplywithinthe nextfew years. Similarlyin
theunderdeveloped
to economicand
Afghanistan,
powersectoris a majorconstraint
socialdevelopment.
The energyinfrastructure
in Afghanistan
is undeveloped;
only6
of
has
access
to
and
a
mere
270
MW
of
is
percent population
electricity
generation
availabledomestically,
whichis farless thanthe demand.Tajikistanand Kyrgyz
resourcesrelativeto theirneeds,which
Republichave largeuntappedhydropower
could potentially
be developedinto competitive
regionalpowerplants.There is
immensepotentialforcooperation
in thisfield. Similarly,
Pakistanand Kazakhstan
are exporters
of agricultural
productslike wheat,rice,fruitsand vegetableswhile
IranandTurkeyare importers
of theseagricultural
commodities.Pakistan'sTextile
Sectoris in an advancedstagewhilecountrieslike Turkmenistan,
and
Kyrgyzstan,
Uzbekistanare tryingto establishcompetitive
textileindustry.They can benefit
fromPakistanwho in turncan further
its competitiveness
in textile
strengthen
in collaboration
withthesecountries.Turkeyhas developeditsautomobile
industry
and Pakistan's automobileindustrycan benefitfromtheirexperience.
industry
Thereis a lot of roomforintraindustry
tradeamongthecountriesof theregion.
Pakistanand Kazakhstancan increasetheirexportsof agricultural
productslikerice,
fruits
andvegetablesetc.to TurkeyandIran.
CONCLUSION
The acid test of the success of a regional groupingis its impact on
trade.In thisregard,theperformance
in thepost-ECOperiodis not
Intraregional
different
from
the
In
situation.
very
pre-ECO
part, the securitysituationin
and
the
different
of
transition
from
thecentrally
Afghanistan
stages
plannedto the
marketeconomyin the CentralAsian Republicsare responsibleforthe lack of
weak institutional
progresson trade.Otherfactorsinclude poor infrastructure,
in
mechanism
the
member
of
countries,
implementation
inadequatecomprehension
regionalcooperationamongthebureaucraciesof thememberstatesand lukewarm
and statesmanship
will have to
politicalwill.Politicalwill has to becomestronger
be shownto effectively
theagreements
such as TTFA, TTA, ECOTA.
implement
If thingsremainas theyare today,thefateof ECO will be no different
fromthe
fateof theRCD.

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EconomieIntegration
ofECO Countries

923

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