Pakistan now an example of economic integration

There is a common concept of economics by Ernst B Hass, which says that cooperation between two states results in a “spill-over” effect, having an impact on other states as well. With the China-Pakistan Economic Corridor (CPEC) and the Gwadar Port, Central Asia and South Asia will be connected to the Middle Eastern and African Markets, therefore igniting interest from the entire region. With investments pouring in from multiple countries, it won’t be long when we see rapid growth numbers in terms of GDP and job creations for Pakistan.

Economic integration, the spillover effect, and complex interdependence have always remained fundamental topics in international relations and in international politics. Ernst B Hass illustrates in his theory of Neo-Functionalism that integration and cooperation between two states result in cooperation with other states, and this has a ‘spillover’ effect on other states as well. This cooperation could be in the form of politics, in the economy, or on culture.

Such spillover effects further lead to regional economic integration which eventually culminates in supra regionalism with multiple states. Joseph Nye also explained that the use of soft power and of economics creates an environment of integration for nations to enhance cooperation among states. Understanding these concepts requires learning from examples from Europe, the US, and other countries.

In Pakistan, students quote the examples of France and of Europe, and of Canada and the US under the North American Free Trade Agreement (NAFTA). Now, however, Pakistan too will be quoted as an example of economic integration because of the China Pakistan Economic Corridor (CPEC).

CPEC has changed the economic and the geopolitical landscape of South Asia. CPEC is the lifeline of China’s long-enduring dream of its Belt and Road Initiative (BRI). The $60 billion project will change the standards of living for Pakistanis. CPEC’s spillover effect from South Asia to Central Asia, the Middle East and to Europe, moreover, gives credence to Ernst B Hass’s Neo-Functionalism and to Joseph Nye’s soft power.

CPEC is a joint venture between Pakistan and China which is aimed at economic integration and prosperity in the region. China, meanwhile, has never breached Pakistan’s sovereignty and territorial integrity. Similarly, Russia, Iran, Afghanistan, Turkey and the Central Asian states also want to become stakeholders in CPEC.

India has always acted as a stumbling block to CPEC’s success since the project passes through Kashmir. India’s immediate aim, moreover, is to promote Chabahar since its second wheat consignment reached Afghanistan on April 3, 2018, and CPEC could shatter India’s hopes of attaining regional monopoly.

Simultaneously, Iran’s Foreign Minister Javed Zarif visited Pakistan on March 12, 2018, and reiterated that “Iran is interested in joining CPEC and linking Chabahar port to Gwadar for promoting regional economic prosperity.” Considering India’s overtures to the US and to Israel, and President Trump’s decision to scrap the Iran nuclear deal, chances are now high that Iran will embrace CPEC. This would be a major setback to India and to its lobby. Kulbushan Jadhav, moreover, confessed that he was spying in Pakistan and his mission was to sabotage CPEC.

The reality of CPEC in Pakistan is also different from illusion. If completed as planned, CPEC’s productivity would be equivalent to 17 percent of Pakistan’s 2015 gross GDP, and as many as 700,000 jobs would be created. As a result, Pakistan could witness an economic growth of 2.5 percent. With the advent of CPEC and Chinese products in Pakistan, moreover, a new wave of economic opportunities can emerge. Local entrepreneurship is also going to increase in Pakistan.

If completed as planned, CPEC’s productivity would be equivalent to 17 percent of Pakistan’s 2015 gross GDP, while the project would create as many as 700,000 new jobs

I met an entrepreneur who runs a business of a Chinese based heavy bikes firm in Islamabad called the ‘Riders Zone’. When asked about the putative dangers CPEC poses to Pakistan’s economy, Shakeel Hussain, Managing Director of Riders Zone said, “Chinese products are available at low prices in Pakistan and there is no threat to Pakistan’s economy. Chinese products have opened a new horizon for business in Pakistan.” He also added that with these Chinese heavy bikes, his aim was to promote tourism in Pakistan, where foreigners could come and ride across Pakistan”.

A Chinese restaurant in Jinnah Super Market, Islamabad, meanwhile, gave the impression of cultural integration, where Pakistanis and Chinese were sitting and dining together. This amalgamation of the Indus and the Chinese civilization is only possible because of CPEC.

Pakistan needs an economic boost and CPEC is that impetus for Pakistan’s economy. This mega project has connected Pakistan to the rest of the world, with an actual adaptation of Hass’s Functionalism theory occurring at all levels.

Leave a comment