Hedging in South Asia: balancing economic and security interests amid Sino-Indian competition

Abstract

The literature on hedging as a secondary state strategy – built largely on evidence from United States-China competition in East and Southeast Asia – focuses on conditions where a major power presents both an economic opportunity and a security threat. In South Asia, in contrast, secondary states facing strategic competition between India and China have pursued hedging strategies in the absence of a security threat. We develop a theoretical reconciliation of these two phenomena. Hedging at its core involves a trade-off between the material benefits and autonomy costs of cooperating with a major power in a competitive environment. States are likely to hedge when these benefits and costs are simultaneously rising. We test the plausibility of this theory in the cases of the Maldives and Sri Lanka. The autonomy trade-off operates both in the absence and in the presence of a security threat, thus offering a theoretical advancement with greater empirical scope.