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The Changing Face of Pakistan’sEconomic Relations with India andBangladesh: Prospects and ChallengesIrfan Ahmeda & Javeria Shabbirb

a University of Macerata, Macerata, Italyb Shaheed Zulfikar Ali Bhutto Institute of Science and Technology,Islamabad, PakistanPublished online: 28 May 2014.

To cite this article: Irfan Ahmed & Javeria Shabbir (2014) The Changing Face ofPakistan’s Economic Relations with India and Bangladesh: Prospects and Challenges, TheRound Table: The Commonwealth Journal of International Affairs, 103:3, 311-321, DOI:10.1080/00358533.2014.918728

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The Changing Face of Pakistan’s EconomicRelations with India and Bangladesh:Prospects and Challenges

IRFAN AHMED* AND JAVERIA SHABBIR**

*University of Macerata, Macerata, Italy**Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, Islamabad, Pakistan

ABSTRACT Historic links, economic interactions and geostrategic interests make Pakistan, Indiaand Bangladesh vital to one another. The geographic conditions, economic interactions, tradelinks, ethnocultural proximity and historical linkages provide a plethora of opportunities forclose, cordial and cooperative relations among the three countries. This study discusses thecurrent rebirth of economic relations between Pakistan and India and the shift of Pakistani inves-tors to Bangladesh. The extant literature presents a profound discussion on the political,geographical, historical, economic and legal relationships between these countries. However, thispaper addresses some other theoretical and economic aspects, such as investors’ behaviourtowards investment, and financial integration, which are imperative where economic and tradeties are concerned. The paper employs the archival method of reviewing related literature (theo-retical and empirical) and organising and presenting some questions for future investigation.

KEY WORDS: Pak-India trade, Pak-Bangla trade, investors’ behaviour, financial integration,prospects and challenges, Mohammed Ali Jinnah, Pakistan, India, Bangladesh, World TradeOrganisation, South Asia Free Trade Area

Introduction

What war could ravish, commerce could bestow

And he returned a friend, who came a foe. (Alexander Pope)1

Economic cooperation is one of today’s great needs whereas the globalisation of econo-mies requires a borderless world that is associated with economic integration. Theextant literature has argued that economic integration can be promoted even amongstates in conflict and can eventually overcome political antagonism (e.g. Ohmae, 1990;Murayama, 2006). Borders need not necessarily remain political barriers, particularly inregions that were once part of the same cultural and political area. As Mohan, a

Correspondence Address: Irfan Ahmed, University of Macerata, Economics and Law Department, PiazzaStrambi, 1, 62100, Macerata, Italy. Email: irfisam@gmail.com; Javeria Shabbir, Shaheed Zulfikar Ali BhuttoInstitute of Science and Technology, Islamabad – 44000, Pakistan.

© 2014 The Round Table Ltd

The Round Table, 2014Vol. 103, No. 3, 311–321, http://dx.doi.org/10.1080/00358533.2014.918728

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commentator on South Asian diplomacy, states: ‘these barriers need to be transformedinto zones of economic cooperation’ (Mohan, 2003, p. 269).

Pakistan, India and Bangladesh have ancient common roots. It was an Indian subcon-tinent, ruled by the British during the 20th century, wherein the Hindu majority and theMuslim minority lived together. However, despite living together for hundreds of years,the two communities could not develop harmony in their traditional lifestyle, especiallyin matters that were influenced significantly by their religions (a very common exampleis that Hindus venerated cows and did not eat cow meat, whereas Muslims slaughteredcows as a religious obligation). People of the Indian subcontinent (both Hindus andMuslims) started the freedom movement against British rulers but the turmoil betweenthe two communities grew stronger and stronger, thereby leading to the creation of thetwo-nation theory that envisaged Hindus and Muslims as two nations. The freedommovement was divided into two parts: one represented the Hindus and was led byMahatma Gandhi, whereas the other represented the Muslims and was led byMohammad Ali Jinnah. Hence, in August 1947 the subcontinent was duly divided intotwo parts: Pakistan and India.

Pakistan emerged with a profound ethnic diversity overlapping with its geographicaldivision into two non-contiguous wings, West Pakistan and East Pakistan, with India inbetween. West Pakistan consisted mainly of Punjabis and Mohajirs, whereas East Paki-stan was dominated by the Bengali majority. It was a real challenge for the founders ofPakistan to make a homogenised ‘nation state’ with a political-institutional frameworkthat could democratically accommodate ethnic divisions with multiple and complemen-tary identities. Unfortunately, since its beginning, Pakistan has been presided over bymilitary generals several times in its history. Several unwise policies of West Pakistan’snation state created unrest among the Bengalis. The most significant of these policieswere: the imposition of Urdu as the sole state language (which led to the languagemovement in East Pakistan); the delay in constitution-making and the dissolution ofparliament when it crafted a democratic constitution in 1954; the amalgamation of theprovinces of West Pakistan (1954) into a ‘single unit’; and, above all, the repressivedenial of ethnic recognition to the Bengalis (Shah, 2013). These policies sparked thecivil war initiated by the Bengalis in 1971 that led to the division of Pakistan into Ban-gladesh (the former East Pakistan) and present-day Pakistan (the former West Pakistan).

Notwithstanding the bitter historical record, the three countries share a cultural aware-ness, the same historical traditions, the same mild climes, similar social and familystructures, similar living standards and similar business environments. Moreover, peopleof the three countries can communicate easily with one another although they have dif-ferent national languages. Therefore, having a common geographical region, culturalaffinity and language familiarity, these countries offer lucrative opportunities to thebusiness community and investors to make cross-border investments. Unfortunately,some political, geographical, infrastructural and legal barriers among these countrieshave choked potential investors with a host of impediments, which could be the tip ofthe iceberg of economic and trade disintegration. The major bone of contention betweenPakistan and India is the State of Jammu and Kashmir. The two countries have foughtfour costly wars. On the other hand, Pakistan and Bangladesh never forget the year1971, which marked their separation. There is a traditional rivalry between these nationsthat impinges not only on the countries themselves but also on global economies. Thethree countries are of great importance globally and remain the focus of interest for

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many academics/researchers. Many studies have been conducted on the relationshipsamong these countries (e.g. Wilkinson, 2000; Islam, 2004; Chaudhury, 2009; Rakisits,2012; Schofield, 2011). The governments of the three countries have always yearnedfor harmony in political and economic relations and it has always been believed thatthe political relations among these countries can be significantly normalised by expand-ing trade relationships. But the hopes of better political and economic relationships arestill unrealised and the fruitful consequences of past efforts have not yet been achieved.

The embroilment, however, has been normalising for several years and the govern-ments as well as the people of these countries have realised the importance and far-reaching implications of trade liberalisation and economic linkages in the region andalso the fact that the politics should be kept separate from economic and trade relations.Positive signals have been there for the last two decades and were in evidence whenPrime Minister Nawaz Sharif of Pakistan told the media, during Indian Prime MinisterVajpayee’s February visit to Lahore, that Pakistan would hold consultations with Indiaon the issue of granting most favoured nation (MFN) status to India. This was a posi-tive response of the Pakistani government towards the Indian government’s approval ofgranting Pakistan the MFN status in 1996 to comply with the principles of the WorldTrade Organisation (WTO). On this positive note, it was observed that Pak-India bilat-eral trade rose 14-fold over the decade, from USD 36.60 million in 1987–88 to USD503.70 million in 1998–99 (Chengappa, 1999). It is interesting to note that Pakistanand India agreed and signed the General Agreement on Tariffs and Trade (GATT) in1947, which articulated the MFN principle.2 However, Pakistan’s reluctance to grantMFN status to India prevailed for many decades.

In November 2011, Pakistan’s Cabinet approved a decision to give MFN status toIndia after a series of talks between the commerce ministers of each country (Curtis,2012; Shah, 2013). However, later, Pakistan retracted and gave in-principle approval to‘trade normalisation’ with India and assured them a shorter negative list.3 This affirma-tive gesture led many investors from both sides to establish trade ties and make plansfor cross-border investments. This was continued by the agreement to establish bankbranches in both countries. Pakistan permitted India to open branches of two Indianbanks, the Bank of India and the State Bank of India, whereas India permitted Pakistanto open branches of two banks, the National Bank of Pakistan and the United Bank(NNI, 2012). They also proposed establishing the Azad Visa policy for cross-borderinvestors. India has also promised to provide electricity to Pakistan.

On the other hand, the prime minister of Bangladesh, Sheikh Hasina, stressed theurgency of removing Bangladesh’s widening trade imbalance with Pakistan as she saidthere is a huge untapped potential for enhancing bilateral trade. She also proposedgranting one another zero-tariff access under the Early Harvest Programme to reducethe expanding trade gap.4 In addition, she invited Pakistani businessmen to invest inBangladesh in the sectors of textiles, pharmaceuticals, telecommunications, informationtechnology and agro-based industries. Moreover, the Commerce Minister of Bangladesh,G.M. Quader, has called upon Pakistani investors to invest in cotton and fabrics in jointventures and to import ceramics, pharmaceuticals and tea from Bangladesh to reducethe trade imbalance between the two countries (Financial Express, 2012). He has alsopromised to facilitate trade and business. Many Pakistani investors are planning tomove to Bangladesh, and some have already shifted their capital there.

Pakistan’s Economic Relations with India and Bangladesh 313

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Notwithstanding the above discussion, this article probes and investigates the facts onthe ground that lie behind the current trend in Pak-India and Pak-Bangla trade andinvestment. Moreover, the paper discusses some behavioural aspects in the canvassingof trade agreements and capital shift across the borders. Ultimately, the paper addressesseveral questions, the five Ws and one H, viz.: why investors from Pakistan are predis-posed to invest in Bangladesh and India; which financial variables can predict the stateof the business; what kind of relationship and trade ties exist between the three coun-tries; where do the critical factors lie in economic links and business cycles; when willthese countries reap the benefit of financial and trade ties; and how can these nations besaved from global economic crises and contagion effects.

The Insurgent Shift of Pakistani Investors towards India and Bangladesh

Pakistan’s bilateral trade with India and Bangladesh is significantly low (see Table 1).However, there is a feverish tempo among the Pakistani investors to invest in the saidcountries. There are several reasons for the movement of investors/businessmen fromPakistan to India and Bangladesh. The apparent reason for establishing trade ties withIndia may be the fact that India is a big economy and Pakistani businessmen can reapmany benefits by trading in manufacturing and service industries such as machinery,equipment and the IT industry. In addition, Indian investment in Pakistan will promoteintra-industry specialisation in the manufacture of parts and components by taking theadvantage of the economies of scale in production, marketing and distribution, as wellas in joint ventures.

On the other hand, several reasons are quoted for the present shift towardsBangladesh, even though it is a small economy. One of the reasons is that power short-ages (load-shedding of gas and electricity) have adversely affected the operations ofcertain industries, especially the production industry. This dilemma has compelled thebusiness community to think of shifting their operations to a neighbouring country—Bangladesh (Reuters, 2012). The current power deficit in Pakistan is estimated at4,000–5,000 MW. Load-shedding increases production costs, disrupts manufacturing

Table 1. Pakistan’s export and imports with India and Bangladesh (value in ‘000’ $)

India Bangladesh

Year Exports % Share Imports % Share Exports % Share Imports % Share

2007 286.72 2.60 1,584.30 8.50 261.947 2.54 61.06 0.322008 372.00 2.92 1,772.86 7.06 341.958 2.75 69.23 0.272009 272.14 1.91 1,455.84 5.35 383.373 2.17 70.03 0.252010 248.43 1.50 2,235.85 7.68 483.423 2.51 76.11 0.262011 233.64 1.09 1,581.50 4.64 931.676 4.33 N/A —2012 397.66 1.48 1,541.56 3.42 462.25 2.70 N/A —2013* 541.87 1.35 2,064.79 4.32 578.83 2.98 N/A —

Notes: N/A: The imports for 2011, 2012 and 2013 were negligible and not mentioned in PBSseparately.*Up to April 2013.Source: Pakistan Bureau of Statistics (PBS), http://www.pbs.gov.pk/trade-tables.

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schedules, and reduces the capacity to compete in export markets. Energy uncertaintyhas distressed business confidence and investment spending. However, this may notseem like a logical argument because power shortages are also a big problem in Ban-gladesh, although the Bangla government is tackling this problem more effectively.Over 50% of Bangladesh’s population does not have access to electricity, while supplyto the rest of the population is unreliable at best. It has been estimated that Bangladeshfaces an energy deficit of around 2,000 MW, which has impoverished the quantity andquality of the electricity supply, manifested in frequent load-shedding and voltagefluctuations (Mukherjee and Pratap, 2010).

The growth rate of the Bangladeshi economy might be another factor that hastempted Pakistani investors to invest in the economy. No doubt, the Bangladeshi econ-omy has risen to a crescendo in recent years, but it is by no means certain that thefruits of this economic boom will transfer to the business community—not until theempirical evidence proves this to be a consistent boom. One more reason for the currentshift of investors’ capital may be the fact that Bangladesh is one of the least-developedcountries and, owing to this fact, enjoys free access to 37 foreign countries, including27 EU countries and 10 other developed countries. This provides a great opportunityfor investors to access foreign markets easily without trade tariff and non-tariff restric-tions. Many businessmen may be setting up their businesses in Bangladesh to gain freeaccess to foreign markets.

In addition to the aforesaid reasons, there are also some behavioural aspects that mayinfluence businessmen/investors in devising investment strategies. The financial marketsof Pakistan, India and Bangladesh are only weakly efficient. The factor of informationuncertainty is common in the three countries and, therefore, investors are normallyinfluenced by ‘herding’ and ‘anchoring’ behaviours when making their investments.‘Herding’ is a behavioural heuristic which states that, as information is costly to obtain,the less informed investor imitates the well-informed investor in investment strategies(Plata and Schrooten, 2003). ‘Herding’ behaviour is generally discussed in the contextof financial contagion as several studies have shown that contagion is the result of‘herding’ behaviour by investors. The increasing importance of Asian emerging marketshas attracted the attention of many researchers to study the behavioural aspects ofinvestors, and several studies have investigated and confirmed ‘herding’ behaviour inAsian countries (Hsieh et al., 2008, 2011).

‘Herding’ behaviour has proved to be a successful variable in investments, as docu-mented by several studies. For example, Chen et al. (2012) investigated the ‘herding’behaviour of foreign investors in Taiwan before and during the US financial crisis andfound that investors herded in Taiwan securities markets and, furthermore, that this‘herding’ behaviour influenced the future returns in both periods positively. Notwith-standing the availability of information in the market, the influence of ‘herding’ on theinvestors’ cognitive profile has been reported in several studies (e.g. Fernández et al.,2011). Therefore, the current feverish trend for Pakistani investors to shift their capitalacross the borders may also be the result of ‘herding’ behaviour, regardless of the infor-mation available and any fundamental analysis that may have been made before takinginvestment decisions.

On the other hand, ‘anchoring’ is a behavioural bias exhibited when people focus toomuch on a reference point when making estimates or devising a strategy (Burghof andProthmann, 2011). As argued by George and Hwang (2004), investors use the previous

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year’s performance as a reference point when estimating the impact of news on themarket. To take the example of the stock market, if good news has pushed the price ofa stock up to or close to its one-year high price, investors are unwilling to bid the pricehigher, even if they should do according to the information received. The news eventu-ally spreads and is slowly incorporated into the stock price, which implies a priceincrease in the stock in the near future. Conversely, investors are not prepared to revisetheir priors for stocks for which bad news arrives and are, as a consequence, traded farfrom their one-year high price. They are not willing to sell the stock for a price as lowas it should be, based on the bad news. As the news spreads, it is slowly incorporated,which implies a decrease in the stock price in the future. Investors react more quicklyand are less biased and, hence, the stocks are traded neither close to nor far from theone-year high price. This apparently non-rational behaviour is implemented strategicallyby investors and yields large profits (George and Hwang, 2004; Burghof andProthmann, 2011). If the current scenario of economic and trade ties between Pakistanand India and the flow of capital investments from Pakistan towards Bangladesh is con-sidered, then ‘anchoring’ behaviour is not evidenced because the positive news hasapparently prompted investors to invest in neighbouring countries. However, this couldbe confirmed only after empirically investigating the driving factors behind the inves-tors’ shift towards neighbouring countries. Therefore, an empirical investigation shouldbe conducted as to why Pakistani investors/businessmen are moving their investmentsto neighbouring countries, and whether ‘herding’ or ‘anchoring’ behaviour influencesinvestors when they devise their investment strategies.

Some Prospects and Challenges

The current stance of investors also draws attention to rational decision-making regard-ing investment, because the timely and rational assessment of business cycle conditionsis a key issue for appropriate monetary policy decisions. The fruits of the current boomin the economy, as in the case of Bangladeshi economic growth, may not be transferredto the business cycle immediately as monetary impulses take time to pass through tothe real economy (Meichle et al., 2011). Similarly, the current warmth, as in the case ofIndia, may not predict the state of business (i.e. expansion and contraction). Therefore,investors must not let this factor go unattended and should adopt a forward-lookingposture before entering neighbouring economies.

It is very difficult to predict expansion and recession in business cycles within stan-dard time series on structural forecast models. However, economists have designedalternative instruments, one of which is the estimation of turning point probabilitiesusing probit models that rely on financial market information. Financial market vari-ables are leading indicators for real activity because, from a theoretical point of view,financial market prices are formed by participants’ rational discounting of expectedfuture returns in liquid and well-functioning markets. These, in turn, are linked to futuredevelopments in the real economy. Moreover, data from the financial markets areobserved, not estimated, and thus go unrevised and are frequently and readily available(Meichle et al., 2011).

When it comes to identifying forecasting models, the question arises as to whichfinancial variables have predictive power. It often seems that variables such as monetary

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aggregates, interest rates for various maturities, risk premiums, stock prices and volatil-ity measures can predict business cycles. However, the extant literature is inconclusive.Some studies support the proposition that the term spread is the best individual predic-tor (e.g. Rudebusch and Williams, 2009). Some researchers, including Naes et al.(2011) and Stock and Watson (2003), have proved that stock market liquidity is supe-rior to the term spread as a predictor. In addition, Meichle et al. (2011) have provedthat stock market liquidity has superseded the term spread as the best individual indica-tor. However, they also state that small economies are significantly influenced by exter-nal shocks. Therefore, the variables that account for external shocks, for exampleexchange rate and international commodity prices, should also be considered.

The above discussion underlines the necessity of considering financial variablesbefore predicting the business cycles of economies, if one is to enjoy the fruits ofinvestments. In the case of Pakistan, India and Bangladesh, the investors or businesspeople who are planning to make investments across these borders must identify thosefinancial variables that could be the dominating predictors.

Another very important aspect, here, is the fact that the current economic, trade andfinancial ties of Pakistan with its neighbouring countries, India and Bangladesh, willalso change the existing relationship between the markets of these three countries. Inthe past, the financial and economic ties of Pakistan with India and Bangladesh werenot significant, and so their financial markets were not integrated. But increasing tradeand economic links may increase the degree of integration as economic and financialintegration occurs in the form of foreign direct investment, cross-border borrowing,stock and bond trading in foreign countries and banks lending and borrowing interna-tionally (Menon et al., 2009). Several studies show that the rapid expansion of interna-tional trade in commodities, services and financial assets increases integration in theworld’s economic and financial systems (Kearney and Lucey, 2004; Chowdhury, 2005).Moreover, Karim and Majid (2010), while studying the US, Malaysia, Japan, Singapore,China and Thailand, have also proved that trade matters for financial market integra-tion.

Knowledge about the integration of financial markets is imperative and useful forinvestors in the three countries for several reasons. First, international portfolio invest-ments influence the exchange rate and could lead to the appreciation of the local cur-rency of the country that is to be considered by multinational companies when makingfinancial policies. Second, according to portfolio diversification theories (Markowitz,1952; Sharpe, 1964; Lintner, 1965), if financial markets are integrated then there is nolong-term benefit in diversification for international investors. Third, in closely linkedmarkets, there is the danger of a contagion effect as shocks in one market may spillover into closely linked markets (Ahmed et al., 2012). Hence, investors who are plan-ning to make investments in any of the three countries need to investigate the financiallinkages between them and also among other countries because the markets of the threecountries may be integrated with other international markets. If these are, then anyspill-over effect of global crises may suddenly shift to these countries. The most recentexample is the US financial crisis, which has engulfed all the economies that are closelylinked with the US. A body of literature posits the economic and financial relationshipof these countries with other countries, particularly with the US. For example, Menonet al. (2009) proved that the capital markets of India and the US are not integrated,while Misra and Mahakud (2009) also found an absence of integration between the

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Indian financial market and the US financial market. On the other hand, Hoque (2007)found strong evidence of co-integration between the markets of Bangladesh and the USand weak evidence of co-integration between the markets of Bangladesh and India.Similarly, the capital markets of Pakistan and the US were found to be co-integrated byAhmed et al. (2012). However, there is a significant lack of studies on linkagesbetween the Pakistani, Indian and Bangladeshi financial markets. Moreover, the scenariofollowing the present trade ties and capital transfer will be different. More studies arerequired to show what kind of linkages exist between the three countries and what theimpact will be of current trade ties on existing linkages.

Here, another question arises: when and how will Pakistani investors reap the benefitsof current financial ties? There are some factors, here, that are vital in the three-wayrelationship. First, India is a big economy and produces a wide range of manufacturedgoods, including machinery and equipment. Indian investment in Pakistan will promoteintra-industry specialisation in the manufacture of parts and components by takingadvantage of the economies of scale in production, marketing and distribution as wellas in joint ventures. Second, Bangladesh is recognised as a least-developed country bythe WTO and has been granted free access to 37 countries, including 27 EU countriesand 10 other developed countries, including Japan, Australia, Norway and Canada(Islam, 2004; Reuters, 2012). Therefore, Pakistani investors have ample opportunity togain access to foreign markets, avoiding high tariffs and non-tariff barriers by settingup their business units in Bangladesh. These investments could be in the form of for-eign direct investment (FDI) or joint ventures. Pakistan can make a free trade agreement(FTA) with India and Bangladesh (some progress has been made recently in the SouthAsian Free Trade Area (SAFTA) programme). The FTA will, no doubt, intensify thecompetition for import-competing industries but will provide new and expanding oppor-tunities to current and potential exporters. At the same time, an FTA would reduce ille-gal trade between the countries. There may be some reservations on the part ofdomestic importers/exporters regarding free trade and the three countries have alreadyconstructed negative lists (i.e. commodities excluded from the FTA). The problem, here,is to identify the coverage of the FTA, the negative lists of commodities that will beexempted from the FTA, and the possibility of reduction or elimination of tariffs andnon-tariff barriers. Ideally, the FTA should open up opportunities for specialisation andthe division of labour among the three countries. The negative lists should be compiledby the partner countries in such a way that liberalisation is mainly directed to items thatdo not compete with one another’s production but divert imports from sources in othercountries to the partner countries.

Pakistan can significantly improve her balance of trade under the FTA but it can onlyhappen if Pakistan has an extensive negative list while India has a small one, and ifPakistan reduces trade restrictions very slowly over a long period while India liberalisesvery rapidly within a very short period. The recently established FTA between Indiaand Sri Lanka may provide a few lessons for the proposed Pak-India and Pak-Bangladesh FTA. The Indo-Sri Lankan FTA has been associated with an increase inIndian investment in Sri Lanka. Therefore, if the FTA is accompanied by measures thatfacilitate the flow of capital, especially FDI, to Pakistan to take advantage of opportuni-ties provided by the FTA for export expansion or import replacements in tradable com-modities sectors, there is scope for increased investment in services and non-tradablesectors, which serve and are linked with the tradable sectors.

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Conclusion

It cannot be denied that trade is a fundamental component of any country’s develop-ment. It provides capital, employment, technology, managerial expertise and a multitudeof other benefits. With a geographical region, a cultural affinity and language familiarityin common, the three states (Pakistan, India and Bangladesh) have ample opportunitiesto establish trade ties with one another and can diminish their trade imbalances. Politi-cal and geographical contentions may have deprived them of lucrative opportunities butthere is now a positive trend in the economic and trade relationships between the threenations.

This study has discussed the present hype surrounding the rebirth of Pakistan’s tradeand financial ties with India and Bangladesh. Several critics consider this trend to beephemeral and the efforts being made as desultory. According to them, another eventlike the Mumbai attacks will shatter all linkages and sour relations. However, this studyis optimistic about the outcomes of the present warming of relations and presents someprospects and challenges regarding the current scenario. There is no doubt that eco-nomic integration can be promoted even between states in conflict and can eventuallyovercome political antagonism. There is now an extensive literature dealing withPakistan’s political and economic relations with India and Bangladesh. This study hasdiscussed some additional economic and financial facets such as investors’ ‘herding’and ‘anchoring’ behaviour and financial integration, which are vital but have not beenseriously discussed in the literature. The study concludes that the three states must showequanimity in their attitudes in critical situations if they are to prolong the lucrativeprospects of economic ties.

Acknowledgements

The authors are very grateful to Martin Harper, Cristina Lungu, the Editor and twoanonymous reviewers for their helpful feedback.

Notes

1. The Works of Alexander Pope, Esq. With Notes and Illustrations By Himself and Others, Vol. 5, pp. 141.2. Mohsin Khan, ‘India–Pakistan trade: The MFN breakthrough’, AFPAK Daily Brief, Friday 4 November

2011.3. Tridivesh S. Maini and Manish Vaid, ‘Indo-Pak Trade, A Visit to Historical Relations’, Briefing Paper No.

5/2012. CUTS International.4. The Daily Star, Source: http://www.defence.pk/forums/bangladesh-defence/31088-bangladesh-pakistan-

economic-relations.html#ixzz2czwKy0Us

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