Trade and The Cost of Borders and Conflict: Evidence from the India Pakistan border

Following the partition of India in 1947, three independent states (India, Pakistan and Bangladesh) have emerged from the former British Indian Empire. Demography was the key determinant of the partition structure and the boundaries were, in many respects, not ‘natural’. There have been a few major wars on the borders and clashes are quite frequent. The new boundaries may have restricted pre-existing trade flows as well.

How did trade flows and production reallocate around the Indo-Pakistan borders (modern day Pakistan and Bangladesh) when British India was partitioned in 1947? What are the modern day welfare costs for India, Pakistan and Bangladesh of keeping their borders closed?  What are the economic welfare costs of India and Pakistan's near-complete bilateral trade embargo?  These are very important policy questions in the context of fragile cross-border security in South Asia.

The national trade data sets on trade have been assembled for the period back to 1948 under this project. Provincial trade data of pre-partition period has also been assembled.  The major challenge for this project is identifying a method to assemble province/state data for the entire 1870-2010 period. With this dataset, the impacts of partition, build-up of trade on the Indian sub-continent and the welfare impacts of keeping modern day borders largely closed can be observed.