South Asia's Economies Beyond India

An introduction to the economies of Bangladesh, Pakistan, Nepal, Sri Lanka, Bhutan, the Maldives and Afghanistan, and what links and divides them.

South Asia is home to around a quarter of the world’s population. India is by far the largest economy, but its neighbours, Bangladesh, Pakistan, Nepal, Sri Lanka, Bhutan, the Maldives and Afghanistan, have their own distinctive economic stories.

A quick tour

Bangladesh: a large, densely populated country that has grown rapidly, driven by garment exports, remittances and social progress.
Pakistan: a large population and economy that has experienced repeated cycles of growth and crisis.
Nepal: a mountainous, landlocked country heavily dependent on remittances from workers abroad, with large hydropower potential.
Sri Lanka: once one of the region’s richest by income per person, it suffered a severe economic crisis in 2022.
Bhutan: a small Himalayan kingdom that earns much of its revenue selling hydroelectric power to India.
The Maldives: an island nation built on luxury tourism.
Afghanistan: devastated by decades of conflict, with its economy collapsing after 2021.

Shared features

Many of these countries share:

Large informal sectors and many people working in agriculture.
Heavy dependence on remittances from workers in the Gulf and elsewhere.
High vulnerability to climate change, from floods to glacier melt.
Deep historical and cultural links, including a shared colonial past for several countries.

Why neighbours matter to India

India’s neighbours are important trading partners, sources of workers and markets for Indian goods, electricity and investment. Stability and growth in the region affect India’s security and economy.

Comparing child mortality

In 1990, Bangladesh's child mortality rate was higher than India's. Over the following decades, Bangladesh reduced it faster, overtaking India on several social indicators despite lower income. Such comparisons show that economic size alone does not determine social progress.

Thinking the region is just smaller versions of India

Each country has its own history, institutions and economic model, from Bhutan's hydropower to the Maldives' tourism. Their paths and challenges differ considerably.

Key takeaways

South Asia holds around a quarter of the world's population.
India's neighbours have distinctive economies, from garments to hydropower and tourism.
Many share informality, remittance dependence and climate vulnerability.
The neighbours matter to India's trade, security and economy.