Global Trade Logistics: South Asia needs more progress to spur faster economic growth

March 2, 2010

Connecting to Global Economy

South Asia’s annual GDP growth rate climbed to around 5.7% during 1980–2000, and further accelerated to 6.5% during 2000–07. However, the capacity of South Asia to efficiently move goods and connect manufacturers and consumers with international markets needs much more progress in order to spur faster economic growth says a new World Bank report, “Connecting to Compete 2010: Trade Logistics in the Global Economy.”

A competitive network of global logistics is the backbone of international trade. Unfortunately, many developing countries including South Asian countries have not yet benefited from the productivity gains of logistics modernization and internationalization implemented over the last 20 years by advanced economies.

South Asia Ranking

India is the top performer among South Asian economies ranked number 47 among 155 countries surveyed in the Logistics Performance Indicators (LPI). Bangladesh improved its ranking to 79 from 2007 when it was 87 among the countries.

Efficient ports and airports that can handle large volumes of container traffic and that are linked to an efficient network of multimodal transport systems are essential features of a successful modern economy, says the report.

South Asia’s port services are very inefficient and trade facilitation restraining trade, and thus a serious constraint upon unlocking the region’s full potential. Unfortunately, Trade facilitation in South Asia has not received the attention it deserves, but increasingly it is gaining prominence in policy circles as well as in the popular media.

It is time to leverage this new interest in trade facilitation and reduction in transaction costs to push for an aggressive reform agenda that would benefit millions people in the region.

About LPI

The World Bank conducts the LPI survey every two years. The study is based on the most comprehensive world survey of international freight forwarders and express carriers.The LPI is created to help countries identify the challenges and opportunities they face in trade logistics performance. Logistics encompasses an array of essential activities—from transport, warehousing, cargo consolidation, and border clearance to in country distribution and payment systems— involving a variety of public and private agents.

The World Bank’s Logistics Performance Index (LPI) summarizes the performance of countries in six areas that capture the most important aspects of the current logistics environment:

Efficiency of the customs clearance process.
Quality of trade and transport-related infrastructure.
Ease of arranging competitively priced shipments.
Competence and quality of logistics services.
Ability to track and trace consignments.
Frequency with which shipments reach the consignee within the scheduled or expected time.