China vs India in the Himalayas: Comparing economic development in Tibet and Ladakh

Abstract

The Himalayas are of great strategic importance for China and India but the remote region remains relatively underdeveloped. This paper conducts a comparative analysis of China's Tibet and India's Ladakh with the aim of identifying common and idiosyncratic factors relevant for local economic development. A descriptive analysis explores the administrative, military, demographic, and economic factors in each region. Moreover, we use an ARDL model to examine the long-run relationship between fiscal transfers and regional growth. Lastly, three measures are employed to investigate the extent of integration between the Himalayan regions and the rest of their respective countries. The results indicate that Tibet and Ladakh exhibit many similarities related to a limited degree of regional autonomy, a strong military presence, and the importance of agriculture and services. The empirical investigation confirms the cointegration between transfers and growth. Regional integration is furthered by increasing inflows of domestic tourists and expanding freight traffic.