Regional trade agreements (RTAs) mushroomed globally during the 1990s. Economic interdependence as a means to attain peace is becoming increasingly important, as the evolving global security paradigm grows weary of purely military solutions to inter and intrastate tensions. Despite the growing importance of an economic interdependence model, most of the existing literature is preoccupied with conducting a theoretical debate on the issue. There are relatively few attempts to test the theoretical premises through empirical studies.
This paper seeks to understand the trade conflict links in a bilateral context. It addresses the question whether economic interdependence between Pakistan and India is possible, and if such interdependence is likely to engender peaceful coexistence between the two. The Pakistan-India relationship is marred by perpetual tensions and intermittent conflict. A key conflict driver is the democracy deficit in Pakistan that ensures military’s predominance in foreign policy formulation and sustains the traditional national security paradigm. Directed rather than elected governance has stifled discourse on prevailing structural anomalies. The democracy deficit has reinforced other bilateral contentions. Political tensions have held trade relations hostage, and despite complementarities, trade flows are miniscule. While a number of trade agreements have been concluded, recurring political tensions have undermined these initiatives. In fact, progress on regional economic integration has been stymied by the strained relations between the two countries. Alternatively, bilateral trade agreements have proven to be better ‘negotiators’ of trade and peace, because they create minimum ripples on the regional political landscape.
The research is designed to stimulate debate at a time when there is a thaw in Indo-Pak relations and continued cooperative initiatives between the two countries can synergize the process of South Asian regional integration.