THE PAKISTAN DEVELOPMENT REVIEW
Economic Integration in South Asia: An Exploratory Study. By Ayubur Rahman Bhuyan. Dacca: The University of Dacca. 1979. Appendix; Bibliography; Index. xi + 224 pp.US S 12.00 or Bangladesh Taka 125.00.
In the book under review, Dr. Ayubur Rahman Bhuyan has made a commendable effort to analyse some of the economic effects of a “possible” customs union among the South Asian countries: India, Pakistan, Bangladesh and Sri Lanka. While an attempt has been made to quantify the static effects of integration, the rest of the analysis is mostly qualitative. In spite of the limitations imposed by the paucity of data, Dr. Bhuyan’s scholarly discussion goes a long way to bring the relevant issues to light. Before going into empirical estimation of the gains and losses of a customs union among the South Asian countries, the author provides a rationale for economic integration among developing countries in terms of the theory of customs unions. He bases his case for economic integration on the need for industrialization. In line with the argument advanced by Johnson as well as by Cooper and Massell, he considers industrial production to be a “public good” which yields to the community satisfaction over and above that obtained through private consumption of industrial products. Industrialization of an underdeveloped country is believed to be virtually impossible in the face of an open competition with developed countries. Hence the need for protection. However, protection has a cost to the economy. Integration is likely to reduce this cost by making available benefits of economies of scale and external economies, thereby bringing about an improvement in productive efficiency.