INDIA’S INTERNATIONAL ISOLATION AND ITS IMPLICATIONS FOR PAKISTAN’S INDUSTRIAL AND ECONOMIC OPPORTUNITIES IN SOUTH ASIA

Abstract

The changing international posture of India has been marked by strategic friction, protectionist trade policies, regulatory bottlenecks and reputational problems which has led to a kind of selective international isolation with significant consequences to South Asia. This paper looks at the impact of relative disengagement of India on regional economic forms and provides Pakistan with industrial and economic opportunities. The analysis based on the theories of regional political economy, trade diversion, and strategic decoupling explains changes in the trade patterns, foreign direct investment, supply chains and geopolitical alignments. The results show that the limited external interaction of India creates opportunities to Pakistan in export-oriented production, services, transportation, and linking to the outside world, especially via the China-Pakistan Economic Corridor. Nonetheless, the success of these opportunities will be determined by whether Pakistan manages to overcome domestic structural weaknesses, governance issues and perception risks that are related to security. The research gives a contribution to the South Asian development literature through the repositioning of regional asymmetries and providing policy-based implications to the capitalization of geopolitical change to achieve sustainable economic development.