World-wide cross-country regressions are used to examine South Asia’s export structure through the lens of Heckscher-Ohlin trade theory. By comparison with other regions, South Asia’s exports are unusually concentrated on labour-intensive manufactures.
This distinctive export structure is shown to be the result mainly of South Asia’s distinctive combination of resources: by comparison with other regions, it has a low level of education and few natural resources, relative to its supply of labour. This basic economic fact must be recognised in the design of trade and development strategy for South Asia over the next few decades.
