BUS613: Advanced International Business

Infrastructure remained a big hurdle for South Asia to reap potential and develop rapidly. For example, 40% of firms in India, 45% in Pakistan, 60% in Bangladesh, and 75% in Nepal reported that inadequate infrastructure is a major obstacle to their pursuit to grow rapidly. Infrastructure deficit in South Asia is ever increasing and has reached a level where it hurts the domestic economy as well as the external sector of the region. The gap between supply and demand for infrastructure is continuously on the rise.

In South Asia, road density varies considerably. Road density is highest in Bangladesh despite the fact that just 30% of its roads are paved and more than 60% of its rural population lack access to all-season roads. The road density is lowest in the tough terrain Bhutan and Nepal. Meanwhile India has the world's second longest road network (i.e., 3.5 million km road network, and has 70,000-km-long national highway network), but road quality in India leaves much to be desired. More than half of its roads are not paved and a great deal of highways have just two lanes. Road network is shattered in rural India areas, where only 60% of the population has access to all-weather roads. Road condition in Pakistan are no different than any other part of South Asia. Total length of roads in Pakistan was 269,618 km in 2016, out of which 63% was paved. Around 60% of the road network is in poor condition due to poor maintenance and vehicle overloading, etc. The share of national highways and motorways in total road network for Pakistan is just 4.2%, but together the two handles more than 85% of Pakistan's total traffic. Poor road quality not only contributes to the cost of production, but it also retards the much needed connectivity in the movement of people and goods. Resultantly, poor transport infrastructure keeps domestic as well as international trade on hold.

Besides transportation, the shortage of energy and its related infrastructure is a huge constraint for inter-regional and international trade in South Asia. Garsous argues that the energy sector has a more significant impact than any other sector of infrastructure on international trade. Investing in the energy sector is crucial for development and for securing a high trade balance.

Access to electricity is a good indicator to understand the quality of energy infrastructure. Recently, the access to electricity in the selected South Asian countries has improved, however, the access to the basic input of electricity is still a big issue in South Asia, particularly in Bangladesh and India where a quarter of their population has yet to get access to electricity. Access to electricity in Nepal and Sri Lanka is more than 90% while it is around 99% in Pakistan (see Fig. 1), but despite a broad access to electricity, rampant load shedding and short supply of electricity has deprived Pakistan to excel on the economic front.

per capita fixed broadband