The countries of the South Asian Association for Regional Cooperation (SAARC) represents 1.47 billion people, which is around 25 per cent of the world population. The inspiring and unique aspects of SAARC countries are :high intensity of bio-diversity in the region; largest population of youth in the world; combined purchasing power that has the potential to be the highest in the world; a civilisational heritage that goes back thousands of years. The regional organisation SAARC originally comprises Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, it however, has included Afghanistan formally in April 2007 as the eighth member which is in turmoil due to its relations with Pakistan. The initial phase evolution of SAARC involved the Foreign Secretaries and senior officials of the region in an effort to agree on a basic framework of regional cooperation. It started with the first meeting of the Foreign Secretaries held in Colombo in April 1981 and extended up to March 1983. The beginning of the second phase was marked by the convening of the meeting of the Foreign Ministers in New Delhi in August 1983 which elevated the  process from the official to the political level. In the third and final phase the historic event came when the Heads of State or Government met at the first SAARC Summit in Dhaka in December 1985 and decided to establish the South Asian Association for Regional Cooperation.  Further the policy-level meetings, well supported by the reports and recommendations of the technical bodies, have in fact led to a continuous process of expansion, at least in the non-controversial areas of cooperation.
Formation background
Earlier the pre-independence pattern of externality of interaction had gained strength and prevented the evolution and growth of regional economic cooperation. It has made both the process of community formation and the promotion of a common regional identity more difficult and complex. But when the South Asian countries attained a reasonable degree of mutual trust and a common interest in peaceful change, attempts to initiate and institutionalise economic cooperation began to emerge in early Eighties. In the circumstances fostering of economic cooperation was premised on three assumptions. First, the promotion and satisfaction of economic goals through cooperative measures would establish the salience of economic issues in intra-regional relations. Second, the realisation of equitable distribution of benefits from the expansion of cooperation in areas of commercial and industrial activity would reduce the severity of hitherto unresolved disputes to a manageable level. And finally, dialogue through the SAARC forum and enhanced transactions would affect a positive change in the attitudes of leadership and help bring about consensus on peaceful means of resolution of conflicts.  In other words regional cooperation is important in both economic and security terms. Multiplying interdependence through trade, investments, and technology cooperation generally leads to a better alignment of security perceptions and a pacification of historical enmities.
Common factors among nations
Cooperation among states is promoted by common factors which may be geographic, ethnic, linguistic, religious, civilizational, politico-historical or socio-economic. The greater the interaction, the better are the chances of success of cooperative endeavours. The South Asian region certainly has commonality of several factors with minor variations in their distinct origins or puritanic patents which are neither distinguishable nor material. The entwining communication technology would suffice in times to come to psychologically further integrate the peoples of this region.  In today’s world satellite beamed images, internet trade, electronic money transfer, foreign investment, multinational businesses, tourism, electricity grids, energy pipelines and a host of other factors are enlarging the interface of persons and nations with their counterparts abroad. Political borders are becoming more porous-economically, technologically, culturally and environmentally.
In the light of fast changing and upward global scenario, the regional organisation SAARC had set its main objective to provide a platform for the peoples of South Asia to work together in a spirit of friendship, trust, and understanding for accelerating the process of economic and social development of member states. The countries of SAARC have several core competencies and every country has a vision to become a developed nation in a time-bound manner. One of its stated objectives is to promote regional cooperation through active collaboration and mutual assistance in unanimously chosen programmes in the economic, social, cultural, technical and scientific fields. In the context the SAARC has two sets of clearly defined goals. The overt and immediate goals are non-political in nature, stressing national development through regional socio-economic and cultural cooperation. The underlying and long-term goals are, however, political in nature, aiming at the ultimate creation of a durable, stable and peaceful regional order.
Change in SAARC
About a decade after the formation of SAARC the world got more interconnected economically. As a result the actual forging of links began to take place at the micro-levels of business and people; the macro-level relationships also witnessed between countries and their aggregates became visible. The growing international economic links were seen in a variety of arenas–trade, investment and money market. In the changed world the spreading web of economic ties appeared creating a global state system that is less discrete and more interlocked than before. The need to balance national interests and global interests was a challenge for the countries of region.  Initially the founder members of the SAARC also agreed in the Dhaka Declaration of 7 December 1985 to liberalise trade as early as possible through a step-by-step approach and to prevent marginalisation of South Asia’s trade in the larger global interests.  In the first decade, SAARC, made considerable progress in terms of institutionalisation. Rules governing its working procedures have been laid down systematically and its various meetings at the level of experts, committees, secretaries, ministers and summits have taken place fairly regularly. But in larger interest of the region SAARC did not remain unaffected by the post–cold war directions of regionalism. The member-countries vigorously initiated programmes of economic reforms and liberalisation with the view to integrate their respective economies with world economy. They felt that now a broad consensus among them to strengthen SAARC in this new direction can no longer be ignored.