State (In)security: The Impact of Insurgencies on Economic Integration

Do insurgencies reduce the degree to which states open their economies to the rest of the world? I offer a new theory and evidence suggesting that states dealing with domestic insurgencies are less likely to pursue deep economic integration. I argue that insurgencies hinder economic integration along three dimensions. First, states are reluctant to invest in material infrastructure for integration that insurgents can use to their advantage. Second, insurgencies reduce the willingness of states to give up policy making flexibility to international institutions. Third, they do not wish to set a precedent of ceding sovereignty in certain circumstances. A multi-method research design provides evidence for this negative relationship between insurgencies and the depth of economic integration. Quantitative models using cross-national observational data on economic integration depth show lower levels of integration for insurgency-ridden states. I trace the causal mechanisms with a case study of India using original archival and interview data.