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211. Strategic Stability in South Asia: Pakistan and the Challenges of Nuclear Deterrence

Author:
Muhammad Tehsin, Asif Ali, and Ghulam Qumber
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
South Asian Studies
Institution:
Department of Political Science, University of the Punjab
Abstract:
The protracted conflict between the US and the former USSR demonstrated that deterrence stability is improved by détente. South Asia‟s environment is characterized by mutual hostility; conventional military balance tilting in favor of India; and lack of a transparent and nonaggressive nuclear doctrine. The aforementioned factors are the missing components of détente. Both the provocative Indian expansion in its nuclear weapons programme, and Pakistani retaliatory notion of the short-range weapons option, is problematic not only in the South Asian context, but also contradictory to the decades-long experience acquired during the Cold War. Pakistan and India must move towards nuclear CBMs, doctrinal clarity, and risk-reduction measures in the light of new technological advancements, and changing US role in the region.
Topic:
Nuclear Weapons, Territorial Disputes, Nuclear Power, Political stability, Grand Strategy, and Crisis Management
Political Geography:
Pakistan, South Asia, India, Punjab, and United States of America

212. India’s Great Slowdown: What Happened? What’s the Way Out?

Author:
Arvind Subramanian and Josh Felman
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We examine the pattern of growth in the 2010s. Standard explanations cannot account for the long slowdown, followed by a sharp collapse. Our explanation stresses both structural and cyclical factors, with finance as the distinctive, common element. In the immediate aftermath of the Global Financial Crisis (GFC), two key drivers of growth decelerated. Export growth slowed sharply as world trade stagnated, while investment fell victim to a homegrown Balance Sheet crisis, which came in two waves. The first wave—the Twin Balance Sheet crisis, encompassing banks and infrastructure companies—arrived when the infrastructure projects started during India’s investment boom of the mid-2000s began to go sour. The economy nonetheless continued to grow, despite temporary, adverse demonetization and GST shocks, propelled first by income gains from the large fall in international oil prices, then by government spending and a non-bank financial company (NBFC)-led credit boom. This credit boom financed unsustainable real estate inventory accumulation, inflating a bubble that finally burst in 2019. Consequently, consumption too has now sputtered, causing growth to collapse. As a result, India is now facing a Four Balance Sheet challenge—the original two sectors, plus NBFCs and real estate companies—and is trapped in an adverse interest-growth dynamic, in which risk aversion is leading to high interest rates, depressing growth, and generating more risk aversion. Standard remedies are unavailable: monetary policy is stymied by a broken transmission mechanism; large fiscal stimulus will only push up already-high interest rates, worsening the growth dynamic. The traditional structural reform agenda—land and labour market measures—are important for the medium run but will not address the current problems. Addressing the Four Balance Sheet problem decisively will be critical to durably reviving growth. Raising agricultural productivity is also high priority. And even before that, a Data Big Bang is needed to restore trust and enable better policy design.
Topic:
International Trade and Finance, Economy, Global Political Economy, Economic growth, and Global Financial Crisis
Political Geography:
South Asia and India

213. Validating India's GDP Growth Estimates

Author:
Arvind Subramanian
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
My recent research paper “India's GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications,” (hereafter “GDP paper”) and the associated op-ed in the Indian Express on June 11, 2019 have generated considerable debate. This is encouraging because serious argument and counter-argument are the basis for good policy-making. Since the issue itself is of great importance, the counter-arguments to my analysis warrant a considered response. That is the aim of this note, which is a complement to the original paper, addressing both the larger issues and some of the specific points that have been raised. The note is structured as follows. Section II describes my engagement with India’s GDP estimation when I was Chief Economic Adviser. Section III elaborates on the framework/approach underlying the GDP paper. Section IV makes explicit the key puzzle surrounding India’s growth estimates, and addresses the possible explanations for it. Section V explores the puzzle in greater detail. Section VI provides additional cross-country evidence on growth and price deflators, which support the findings of the original paper, namely that growth during 2011-16 was likely overestimated by a significant margin. Section VII addresses two broad objections to the main findings. Section VIII discusses some of the methodological critiques of the paper. Section IX offers some thoughts on the way forward.
Topic:
Economics, Political Economy, International Development, and Economic growth
Political Geography:
South Asia and India

214. Trust in State and Non-State Actors: Evidence from Dispute Resolution in Pakistan

Author:
Daron Acemoglu, Ali Cheema, Asim Ijaz Khwaja, and James A. Robinson
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Lack of trust in state institutions, often due to poor service provision, is a pervasive problem in many developing countries. It may also be one of the reasons citizens turn to non-state actors for services. This paper investigates whether information about improved public services can help build trust in state institutions and move people away from non-state actors. We focus on dispute resolution in rural Pakistan. We find that (truthful) information about reduced delays in state courts leads to citizens reporting higher likelihood of using them and to greater allocations to the state in two high-stakes lab-in-the-field games designed to measure belief in the effectiveness of state courts and willingness to contribute resources for others to access them. More interestingly, we find indirect negative effects on non-state actors in the same high-stakes settings. We show that the positive direct and negative indirect effects are both mediated by changes in beliefs about the effectiveness of these actors. Our preferred interpretation explains these behaviors as a response to improved beliefs about state actors which then motivate individuals to interact less with non-state actors and as a result downgrade their beliefs about them. We provide additional checks bolstering this interpretation and alleviating concerns about potential social experimenter effects or mechanical contrasts between the two actors. These results indicate that, despite distrust of the state in Pakistan, credible new information can change beliefs and behavior.
Topic:
Conflict Resolution, Non State Actors, Political and institutional effectiveness, State, and Legitimacy
Political Geography:
Pakistan and South Asia

215. India's GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications

Author:
Arvind Subramanian
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
India changed its data sources and methodology for estimating real gross domestic product (GDP) for the period since 2011-12. This paper shows that this change has led to a significant overestimation of growth. Official estimates place annual average GDP growth between 2011-12 and 2016-17 at about 7 percent. We estimate that actual growth may have been about 4.5 percent with a 95 percent confidence interval of 3.5 - 5.5 percent. The evidence, based on disaggregated data from India and cross-sectional/panel regressions, is robust. Lending further credence to the evidence, part of the overestimation can be related to a key methodological change, which affected the measurement of the formal manufacturing sector. These findings alter our understanding of India’s growth performance after the Global Financial Crisis, from spectacular to solid. Two important policy implications follow: the entire national income accounts estimation should be revisited, harnessing new opportunities created by the Goods and Services Tax to significantly improve it; and restoring growth should be the urgent priority for the new government.
Topic:
GDP, Global Political Economy, Economic growth, and Global Financial Crisis
Political Geography:
South Asia and India

216. Incentivising Pro-Labour Reforms

Author:
Alice Evans
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper shows that countries may reduce labour repression if they perceive this as conducive to export growth. This paper traces what happened before, in the presence of, and then following the withdrawal of international economic incentives for pro-labour reforms in Vietnam and Bangladesh. The Government of Vietnam announced it would allow independent trade unions, in order to join the Trans-Pacific Partnership (TPP) and increase market access. Similarly, the Government of Bangladesh rescinded restrictions on unions, following global condemnation of Rana Plaza and fear of buyers leaving en masse. Both governments reduced labour repression to promote export growth. With high-level authorisation, Vietnamese and Bangladeshi activists and reformists became less fearful, and mobilised for substantive change. However, these economic incentives were short-lived: after Trump’s election, the USA withdrew from TPP; buyers continued to source from Bangladesh, and squeezed prices (without requiring labour reforms). Both governments then amped up labour repression - notwithstanding private regulation, economic upgrading, industry growth, and mass strikes.
Topic:
Economics, Labor Issues, Reform, Economic growth, and Trans-Pacific Partnership
Political Geography:
Bangladesh, South Asia, and Vietnam

217. The Attacks in Sri Lanka and Trends in Salafi Jihadist Activity

Author:
Yoram Schweitzer
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
The recent suicide attack in Sri Lanka, launched by a local group linked to the Islamic State, targeted the symbols of Christianity and Western tourists and businesspeople. The attack aimed to terrorize Sri Lankan citizens, drive a wedge between them and the government, and foment discord between the various ethnic groups. It demonstrated anew that the lack of effective cooperation and intelligence sharing between the intelligence, security, and enforcement agencies is a central factor in the success of terror groups to carry out their plans. The military defeat of the Islamic State does not herald the destruction of the organization or the end of its activity - quite the opposite. The Salafi jihadist ideology and the modus operandi represented by the Islamic State, al-Qaeda, and their affiliates continue to inspire terrorists, whether they are directly or indirectly linked to them, or see them as a model for imitation. Details and the lessons of the Sri Lanka attack, if properly learned, will help prevent or obstruct future terror plans of the Islamic State and its supporters – plans that are expected to challenge many countries in the years to come.
Topic:
Terrorism, Violent Extremism, Al Qaeda, and Islamic State
Political Geography:
South Asia, Asia, and Sri Lanka

218. Making the Millennium Challenge Corporation Compact Work for Sri Lanka

Author:
Ganeshan Wignaraja
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
In April 2019, the Board of Directors of the Millennium Challenge Corporation (MCC) approved a compact program for Sri Lanka. This is a large five-year grant that was provided to Sri Lanka on the basis that it meets the MCC’s eligibility criteria of good governance, economic freedom, and investment in its citizens. It will be implemented by a team appointed by the Sri Lankan government, under the guidance of MCC. As the process has taken longer than expected, it is hoped that the MCC Board when they meet on 18 September 2019 will grant additional time for the MCC Sri Lanka Compact (MCC Compact) to be approved by Sri Lanka’s Cabinet. President Maithripala Sirisena has suggested that a decision would be taken after the upcoming Presidential elections in Sri Lanka in December 2019. Proponents argue that it can reduce bottlenecks in transport and commercial land administration. Meanwhile, critics of the MCC Compact raise a host of legal, environmental, and external political interference issues. As Sri Lanka prepared to make a decision on whether to proceed with the MCC Compact, a simple cost-benefit analysis of the MCC-Sri Lanka Compact from a national economic perspective is imperative.
Topic:
Governance, Economy, Investment, and Private Sector
Political Geography:
South Asia and Sri Lanka

219. Peace Talks on Afghanistan. A Last Opportunity for Peace? / Conversaciones de paz sobre Afganis-tán ¿Una última oportunidad para la paz?

Author:
Javier Ruiz Arévalo
Publication Date:
12-2019
Content Type:
Journal Article
Journal:
Journal on International Security Studies (RESI)
Institution:
International Security Studies Group (GESI) at the University of Granada
Abstract:
When it has been more than 17 years since the fall of the Taliban regime, the Afghan conflict is far from being over. The country continues to experience a kind of resilient civil war in which neither the legitimate government of Kabul, supported by a large part of the international community, nor the Taliban have managed to impose themselves in a clear and lasting manner. To date, it seems that none of the contenders considers it feasible that the conflict will end with a military victory. This reality has ended up addressing all the direct actors (the government of Kabul, the US and the Taliban) and the indirect actors (NATO, Russia, Pakistan, Iran...) to seek a negotiated end. The task is not easy given the difficulty to find an acceptable definition for everyone on the Afghanistan that should arise from the agreement. Reconciling the Islamic Republic that some advocate, with the Democratic State designed by the current Constitution is not an easy task. Perhaps for this reason, more than a decade of talks has not been enough to illuminate a peace agreement acceptable to all. At first, one might think that nothing has changed and that the talks currently undegoing are hopelessly doomed to failure, as they face the same problem as all previous attempts: the impossibility of reconciling the interests of the Afghan government, the Taliban and the US and its allies. However, it seems that the ongoing talks have been addressed by the US and the Taliban with a different spirit. The fatigue after so many years of conflict and the evidence, eventually assumed, of the impossibility of a military victory seems to have made a dent in both, making them see that there are only two possible options: accept an imperfect agreement or be doomed to an endless war.
Topic:
Taliban, Political stability, Conflict, Negotiation, and Peace
Political Geography:
Afghanistan, South Asia, North America, and United States of America

220. The Methane Economy

Author:
Chaitanya Giri
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
Gateway House: Indian Council on Global Relations
Abstract:
The United Nations’ 2015 Paris Agreement called for the immediate sequestration of atmospheric anthropogenic greenhouse gases to help avert serious environmental degradation. India can take the lead in this because it is the second largest emitter of methane. Of all the natural greenhouse gases, methane is the hardiest. Technological advances are making it possible to crack methane into gaseous hydrogen and solid carbon on a commercial scale. Methane cracking can provide a steady supply of hydrogen for futuristic transportation and solid carbon materials — graphene, carbon nanotubes, synthetic diamonds — which are integral to the marine, aerospace and space industries. The commercial benefits apart, methane cracking will also go a long way in meeting the Paris Agreement’s climate change mitigation objectives. This paper offers some concrete recommendations that can help the government of India shape national legislation and global geoeconomic strategies.
Topic:
Climate Change, United Nations, Methane, Carbon Emissions, and Paris Agreement
Political Geography:
South Asia and India