South Asia has made much progress in deregulation and liberalization in the 1990s, but it still remains one of the least integrated regions in the world. However, this general trend masks wide disparities among South Asian nations - the larger economies tend to be more highly protected, with low import penetration rates, while the smaller economies are relatively more open. If the current reform program continues, the benefits of liberalization will translate into higher growth. This report reviews the region's economic performance from an international perspective and the steps taken to increase integration, especially in terms of financial integration (increased foreign direct investment, portfolio and capital flows) and regional integration (intra-regional trade, regional arrangements). Chapters also discuss the economic outlook for the region and prospects for South Asian exports such as textiles and clothing.