Conflict and regional integration between Pakistan and India. An inquiry into the economic gains and the “peace dividend” from SAFTA

none1noSince partition in 1947, when they both gained their independence from Great Britain, India and Pakistan have become sovereign states along opposite sides of a militarized border. In this book Eugenia Baroncelli traces the evolving connection between inter-state violence and trade in Pakistan-India relations. Based on a gravity model of international trade, the book discusses the impact of war on bilateral trade from 1948 to 2000. Ongoing militarized disputes have significantly reduced Pakistan-India trade, leading to a fourfold decrease in expected flows in war years. Trade diplomacy through regional preferences has however engendered some optimism on the future relations between the two countries, as indicated by the trade gains that can be expected from the implementation of SAFTA (South Asian Free Trade Area). Nonetheless, trade gains from preferences are more contained compared to trade gains from shifting to a peaceful environment. Moreover, trade gains appear endogenous to security relations, so that their realization is conditional upon reduced tension in high level diplomacy between the two countries. While the potential of trade dividend from peace is great, so are the challenges that still stand in the way of Pakistan and India’s peace building through commercial diplomacy.The book builds on original research conducted by the Author between 2004-2011 on the links between trade diplomacy and security relations between Pakistan and India, from partition to this day. Originally sponsored by the World Bank, and endorsed by the State Bank of Pakistan, the quantitative portion (model, data and findings) as well as the policy inputs presented in the book have been presented at conferences in Washington DC and Islamabad, and submitted to multiple review processes, blind and non-blind, by international experts, scholars and practicioners in International Trade and Trade Political Economy. Similarly, the qualitative portion has benefitted from reviews at subsequent junctures by IR and Political Science scholars. I wish to thank the participants to the Workshop on Pakistan-India Trade, held in Islamabad in July 2005, for providing me with their valuable comments and suggestions. I am grateful to Ijaz Nabi, Miria Pigato, Zareen Fatima Naqvi and Philip Schuler for their precious inputs into the core stages of this research. I am grateful to Marcelo Olarreaga, for his thorough and sharp review. I wish to thank Terçan Baysan and an anonymous reviewer, for their thought-provoking comments. Omar Azfar, beloved friend and brilliant mind, kindly provided me with his trademarked spirited, top-rate comments: his premature departure in January 2009 left an immense void, but his intellectual legacy will remain for the generations of political economy scholars to come. I am indebted to Alessandro Nicita for giving me with his valuable insight. I am also grateful to an anonymous reviewer from the State Bank of Pakistan, for his sharp and constructive methodological critique. Finally, I wish to thank Mathias Koenig-Archibugi and Marco Clementi, for providing me core insights on the role of political variables, as well as the panelists of the IR section of the Annual SISP Conference held in Cagliari on September 22, 2005. Any errors, however, remain mine. The opinions expressed in this book are those of the author and shall not be attributed to any of the above persons or institutions. http://www.giorgiopozzieditore.it/component/content/article/38-miscellanea/95-baroncelli.htmlmixedBaroncelli E.Baroncelli E