Formalizing cross-border trade along the Pakistan–Iran border: A policy framework for sustainable economic development in Balochistan

Abstract

Balochistan is one of Pakistan's largest provinces in terms territory and possesses significant economic potential. It plays a central role in Pakistan's bilateral border trade and transit, sharing borders with Iran and Afghanistan and thus connecting the country to Central Asia and the Middle East. The province is also hosting country's largest coastal belt, which remains open for trade through out of year. Balochistan shares a 909-kilometre-long border with Iran and a 1,464-kilometre-long border with Afghanistan. Out of its 41 districts, 14 lie along these boundary lines nine bordering Afghanistan and five bordering Iran. While communities residing on both sides share language, culture, and history. On the basis of these similarities, they have made cross-border trade as a primary source for the sustenance of their livelihood. This trade, however, remains mainly informal which results in revenue losses, weak infrastructure, limited customs capacity, sanctions, and security concerns. The absence of a formal regulatory framework has resulted in deep-rooted informal networks which functions outside legal structures, nurturing smuggling, tax evasion, and governance gaps. This study examines the dynamics of informal trade in Balochistan, identifying factors sustaining informality, and suggests policy measures toward sustainable development. Using a qualitative approach, it draws on interviews with local traders and community representatives, accompanied by policy documents, academic literature, and trade reports. Findings indicate that informal trade is not merely a survival mechanism but a socio-political reality tangled to underdevelopment, unemployment, and weak governance.