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Abstract

What are the merits of Pakistan engaging with India on the economic front? This Working Paper examines three dimensions that would likely accompany a mutual and reciprocal economic overture from both sides (T-T-F): Trade, Transit, and Financial Regimes (FATF). The crux of this study adds more nuance to each of these dimensions, and particularly to the trade aspect given its larger significance in the purported rationale for reengagement.
The paper finds that, although there are some benefits accruing along each dimension, they are generally outweighed by other economic counterforces. In the longer run, there are better ways to spur economic development in Pakistan than to depend on India, particularly when (1) this offers India a future non-kinetic lever to use against Pakistan if (read: when) relations sour later on, and (2) pressure will remain on Pakistan to maintain its defense spending, on which India will not abate due to its ostensibly China-focused power ambitions.

Working Paper

Download: The Economic Dimensions of Pakistan-India Reengagement

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