The Silk Road Economic Belt is a phrase that refers to the ten countries along the Asian subcontinent that are members of the Shanghai Group – China, India, Pakistan, Myanmar, Thailand, Malaysia, and Bangladesh. These countries collectively account for almost half the world’s Gross Domestic Product (GDP). The Belt is being constructed as part of the strategy that China has set out to strengthen its economy in the wake of the global recession of recent years. However, doubts remain about this policy of Belt and Road cooperation having any significant long term impact on the countries along the border. Still, there is an undeniable potential for growth of bilateral trade and connectivity with the countries in the region.
At present, the currencies of these economically powerhouse nations are appreciating consistently against the dollar. This trend has been sustained and is expected to continue, given the current state of the global economy. To the minds of economists, this phenomenon is a positive sign for investment in the region. As China becomes a more powerful economic force, and as other nations catch up, the pressure will be applied on the currencies of the countries along the Belt and Road to appreciate.
For now, however, the focus is on how each country can maximize its trading advantages to allow it to catch up with the rapidly rising Asian counterparts. For India, this includes the integration of its domestic and foreign markets, including the liberalization of foreign investment. Pakistan is looking to expand the regional trade by ensuring that its trading policies become more competitive and to capitalise on the emergence of the Middle-Inland Transport Corridor (MICC). Its focus on increasing connectivity through its ports and airports will also provide a great opportunity for trade liberalization in the coming years Silk Road economic belt.
For Pakistan, this means access to the Middle-Inland Transport Corridor, which is currently emerging as a strategic route for China to access the western portion of China. The corridor has become an important trade route for the coming era. For India, it entails easy access to the West, as well as the East. For both Pakistan and India, the benefits are important, and they have been instrumental in pushing the discussion forward. However, the other countries along the Silk Road will have their own agenda, and the overall plan will be more complicated than anyone anticipates.
Trade between these countries has always been complex, especially in the past few decades. This is because globalisation has pushed the playing field unevenly, with some emerging countries struggling to adjust to the fast pace of change and growth. These include India and Pakistan, who have suffered a great deal during the past half-decade. However, with the recent integration of their domestic and international market, and the burgeoning MICC, these two nations have successfully harnessed the changing face of globalisation.
For Pakistan, the MICC was able to realise their ambitions of globalisation, and secure future trade agreements with India, Japan, Korea and others. The establishment of the MICC heralds the coming of age of multipolarity, as other nations follow suit, and seek deeper trade relations with each other. This means that bilateral trade will not just be the preserve of Asia, as it has been in the past. Multinational organisations have realised that they cannot continue to thrive without having access to the markets of the major players in the global economy. This has lead to the creation of trading blocks, such as the MEA, in order to create mutually beneficial trade relationships across the world.
Multinationals have also realised that they cannot continue to run their businesses alone and are seeking multilateral help when it comes to doing business in developing nations. There is little doubt that the current trends of outsourcing will continue, as companies realise that they need to think globally, not just domestically. This will mean that more nations will be included in the MEA, and this gives rise to the need for multinationals to have a presence there.
However, the future looks bright for Pakistan and India. With M.E.A. finally on its way, the focus is now on the successful negotiation of a deal that will benefit both sides. The success of M.E.A. is the best thing to happen to the textile industry of Pakistan, as it will mean jobs for thousands of people in the rural regions of Pakistan who have suffered over the past few years due to the global economic slowdown.