Using the trade statistics taken from the Asian Development Bank's Regional Integration database, this paper investigates the situation and determinants of trade integration of South Asia into Asia. The dynamic panel data estimation shows that the aid flows from Asian bilateral donors significantly increase both trade volume and trade share. Other positive determinants of the trade volume are the size of the economy, trade openness, FDI inflows, and ICT access. While the number of FTAs is a positive determinant, country's level of economic development, size of economy, and FDI inflows are the negative determinants of trade share.Military expenditure is the negative determinant of both trade volume and trade share. The finding suggests that more FTA participations and foreign aid from within the region should be promoted and militarization should be minimized to accelerate the economic integration of South Asia in Asia.
