New Delhi, Jan 19 (IANS): Regional trade and cooperation between neighbouring countries is adversely affected due to local politics, said Rajat Nag, economist and former Managing Director-General, Asian Development Bank, India.

"Issues are really political, not because of lack of knowledge...not because people don't know what the benefits are... but its local politics which are coming in the way," Nag said at a seminar here on "Cross border Energy Cooperation in the Bay of Bengal Region" organised by CUTS International.

Regional cooperation in South Asia is very low despite great potential and goodwill, he said.

Trying to allay fears concerning cross-border trade due to security threats, he said, "more we get invested in each other...the security increases rather than decreases".

Integrated nature of regional trade and cooperation should be built up in such a way that no one particular party would find it in its interest to disrupt the system, he added.

Speaking about the people losing on land and property due to developmental projects, he said that, such people must be compensated adequately.

"There are losers, and we need to honestly identify who they are and what do we do about compensating them fairly," the economist said.

"Just assuming that regional trade, cooperation is good, is not good enough. You will have to show actually, how this process will work," Nag said.