What lessons can be learned for SAARC from ASEAN?

This paper hypothesises that multilateralism and regionalism are complementary, and that regional income convergence is likely with a committed regionalism which often has links geographically and culturally and analyses the conditional convergence for founder members of ASEAN and SAARC countries by testing stochastic convergence and β-convergence. To supplement these results, this paper further explores the association between international trade, income per capita and regional income convergence by using Granger causality tests. It was found that global (non-discriminatory multilateral) reforms have had a greater impact on increasing trade for both trade blocs, and offer support for the convergence hypothesis in the ASEAN-5 countries. SAARC needs a more radical approach to integrate to promote regional strength (cultural values, low wages and low transport) in order to converge more successfully.