For those who believe that India and Pakistan’s relationship is underexplored when it comes to economic trade, Pakistan’s granting India the Most Favoured Nation status would naturally come as good news.
In the simplest of terms this means that India and Pakistan can finally benefit from the gains of free trade, given their proximity to each other and their large economies, which fits in with the underlying principles of the gravity model. It also forms a new avenue for cooperation between the two countries, something that they have long struggled with.
Here at SAPAC we chose this topic for our second roundtable. A question that came up was whether we can really see this as “good news.” This is in light of two factors. The first that even though India granted Pakistan MFN in 1996, relations have still been unstable, and so perhaps much hasn’t changed in this respect. Which is related to the second more pertinent factor. The political instability.
The reason this may be a more relevant factor is because it pertains to the South Asian subcontinent as a whole. We’ve heard it before. India despite it’s burgeoning economy has faced civil protests and more violence resistance in other regions. Bangladesh is currently dealing with war trials from the 1971 and Sri Lanka is cleaning up the mess from it’s civil war, while Nepal is dealing constitutional reforms. For Pakistan and Afghanistan, which get a significant amount of media attention, we are aware of their problems.
It’s unfortunate but perhaps also unsurprising then that the South Asian subcontinent is one of the least economically integrated regions.
Similar concerns were voiced at the “Fourth South Asia Economic Summit” conference in Dhaka, Bangladesh, that called for better governance and stronger institutions to facilitate economic cooperation. Is this what is holding us back?
There are two ways of looking at the situation: the first is the domestic outlook, where there is a landscape of political instability in the region which we can’t overlook. At the same time if we look to our Western economies and the global economic situation day, then even issues like the Most Favoured Nation status speak volumes for a region of the world that is undoubtedly rising economically as it attempts to disentangle itself from it’s past conflicts. Maybe it is time for South Asia to step up.