chapter  6
16 Pages

Theoretical foundations of the economic integration and conflict relationship in South Asia

This chapter presents the theoretical foundations of the relationship between economic integration and conflict. At the outset, it needs to be stated that the theoretical foundations of the trade-conflict relationship in this chapter are presented with twin perspectives of economic analysis and the South Asian context. The need for this clarification has arisen on account of the differential emphasis that is laid upon the causality of direction in the conflict-trade relationship by the two disciplines of economics and political science. The latter continues to debate on whether conflict is positively or negatively impacted by trade, even while including studies that delve into the possible duality of causality in this relationship. The former is, however, exclusively focused on the conflict-reduces-trade aspect of the relationship. The chapter, while taking note of the possible bi-directional causality in the trade-conflict relationship, establishes the appropriateness of a unidirectional view in the South Asian context. Given the fact that the ongoing preferential trade agreements among the South Asian countries at all levels – regional, sub-regional, bilateral – do not as yet cover or are only as yet negotiating to incorporate investment liberalization, the trade-conflict framework is the mainstay of our analysis.