Scholars point out how economic integration can be an invisible hand of peace- as a form of international stabilizer to threats. Before diving into this paper’s subject matters of Nepal needing economic integration- it’s worth noting that the idea of “needing a McDonald’s” for peace is not about burgers, but about economic ties and shared interests.
Caption: Nepal’s metaphoric need of McDonalds’ signifying the need for economic integration as a stabilizer of peace
Thomas Friedman’s Golden Arches Theory first wryly observed that “no two countries that both have a McDonald’s have ever fought a war against each other”. While tongue-in-cheek and rhetorical— he later expanded his ideas by stating— as long as the supply chains span multiple countries, those nations will avoid conflict to protect their economic stakes.
Meaning, the idea is simple, if your country is integrated more in terms of trade, regionally, multilaterally or globally, then there is a higher chance of your security without the need of explicit hard power or deterrence.
McDonald’s as more than just fast food
Friedman’s original quip linked the global spread of McDonald’s to the rise of middle-class consumerism and the decline of war incentives. Critics of the Golden Arches Theory quickly pointed to counterexamples such as NATO’s bombing of Yugoslavia in 1999 or Russia’s 2022 invasion of Ukraine among many other examples of democracies going to war as proof that franchises alone cannot guarantee peace.
Caption: The idea of McDonalds’ (the franchise) and Peace was brought out in Thomas l Friedman’s Book called The Lexus and the Olive Tree
But the theory in my belief argued more than just franchises. It wanted to explore an idea of global integration backed by capitalist peace theories. It talked about how economic integration today, through globalization and thousands of treaties, deals, and economic leverage, war has become an almost ‘zero-sum game’. No two countries today will go to war if they have more to lose, that’s a capitalist peace assumption but of course war and its ideas are far more complex than just economics.
The invisible hand of peace
Thus, though not an assurance of guarantee scholars for decades have urged for the need of economic integration for a soft resistor to war. Firstly grounded by the ideas of Immanuel Kant’s Perpetual Peace and what later became Democratic Peace Theory argues about this in-hand idea- republicans do not go to war. In simple terms, why would nations risk their own economic damnation, as one assumes, nations are rational.
Caption: 1971, third Indo-Pakistani war, signing the documented instrument of surrender in Dacca.
But, democracies for years have gone to war. Even regionally, conflicts between two giant democracies India and Pakistan is evident to the idea that even though nations are rational, the reason of war usually aren’t. But, there does exist an invisible hand of peace through economic mutual dependence.
Relevance for our sovereignty
Especially relevant for Nepal is the idea to seek such invisible hands of peace. UN does not guarantee peace for Nepal, neither does its ‘balanced’ ties with India or China. Treaties of Peace and Friendship are only treaties if respected by two nations, and as seen during the case of Ukraine, the international system falters when hegemons grab what they want.
Nepal often called a yam between two giant boulders though does not have an imminent threat, the international state of anarchy compels it to secure its self-sovereignty perhaps not through arms or hard power but perhaps through these ideas of economic dependence.
Though the two paragraphs above present a bleak view of Nepal (almost in a realist perspective) the ethos of these statements are to only provide merit to the idea that Nepal as any other sovereign as a Non-Aligned Nation, truly stands alone with no security guarantees. With on-going border frictions such as Kalapani, Susta and strategic overtures from China, perhaps now more than ever is the idea of such peace-tenets to become more prominent.
The economic aspect for Nepal
Nepal’s exports account for merely around 6% of its GDP (among the lowest in South Asia) which highlights its marginal position in global trade. Such economic isolation weakens Nepal’s bargaining power and heightens vulnerability to external pressures. By pushing higher focus on Nepal to increase its trade not just with India but other countries as well, perhaps Nepal may guarantee this so called- Invisible Hand of Peace.
But how?
- Serve as a transit hub: Nepal’s strategic location between India and China offers ‘unparalleled and preferential access’ to both markets.
- Niche-based exports: Promoting specialty products can position Nepal in high-value global markets.
- Preferential & bilateral trade agreements: With 17 bilateral treaties, including duty-free access to India since 1996, Nepal can deepen existing pacts and negotiate new ones to expand export markets.
- Regional integration (BBIN Corridor): The BBIN sub-regional initiative aims to link Nepal with Bhutan, India, and Bangladesh via corridors which reduce transit costs and foster cross-border commerce. Furthermore regional channels like SAARC, BIMSTEC could be the way for Nepal’s economic integration.
- Multilateralism through the WTO: As a WTO member since 2004, Nepal can use its voting rights as well as the forum itself to advocate for fairer market access and safeguard its economic interests.
- GSP+ & EBA arrangements: Beneficiary status under the EU’s Everything-But-Arms scheme and eligibility for GSP+ can secure tariff-free entry for virtually all Nepali goods.
- Brand building & soft power: Improving Nepal’s rank in the Global Soft Power Index (currently 105th) and promoting cultural exports can enhance global demand for “Made in Nepal” products.
- Diaspora engagement: With remittances constituting almost 30% of GDP, building channels for diaspora investment schemes and skills-matching platforms can channel expertise and capital into export-oriented ventures.
- Attract FDI in export industries: Opening sectors such as agro-processing or even tea diplomacy to foreign investment can drive technology transfer and scale up export capacities.
Beyond rhetoric and towards resilience
Nepal does not literally need a McDonald’s to keep the peace but it does need the deep, sustained economic linkages that such franchises metaphorically symbolize. Perhaps in so doing, Nepal can write a new chapter in its own security narrative.
The invisible hand of trade may not guarantee perpetual peace, but it can make war a cost far too great to bear and Nepal can make that happen by leveraging NTIS (Nepal Trade Integration Strategy) as well as other initiatives to become not a key actor in Int’l trade but an actor of some influence, leverage and stake.
