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Pakistan-India Trade Potential and Issues

Author

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  • Zareen F. Naqvi

    (Director of Institutional Research at the University of the Fraser Valley in British Columbia, Canada.)

Abstract

Pakistan and India are the two largest economies in South Asia with very low levels of bilateral trade. This hasbeen the result of border disputes and political tensions, but also of inward-looking import-substitution growth strategies. Trade (including official and unofficial) between the two countries stood at around US$ 2.5-2.6 billion in 2007/08 but it could potentially be as much as US$ 5-10 billion or two to four times its current levels. The Composite Dialogue Process (CDP) has led to substantial improvements in political relations over the last 5 years and trade relations have shown positive outcomes as well. This paper recommends that the process be strengthened further by restarting the stalled CDP, Pakistan granting most favored nation (MFN) status to India, continuing to reduce impediments to trade and trade logistics, and perhaps even considering the possibility of a free trade agreement (FTA) with India.

Suggested Citation

  • Zareen F. Naqvi, 2009. "Pakistan-India Trade Potential and Issues," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 14(Special E), pages 171-201, September.
  • Handle: RePEc:lje:journl:v:14:y:2009:i:sp:p:171-201
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    Cited by:

    1. Zakee SAADAT & Dawood MAMOON, 2016. "Destination EU and USA: Improving Export Potential of Pakistan by Trading with India," Journal of Economics and Political Economy, KSP Journals, vol. 3(4), pages 659-669, December.

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