The Political Economy of Illegal Domains in India and China

This article explores what happens to economic transactions and political arrangements when rule of law collapses, has never emerged, or is purposefully rejected. In other words, it examines what happens when in certain domains, such illicit economies, there are no legally-sanctioned rules or the existing official rules only prohibit the existence of the domain. It addresses several basic questions about illicit economies:  How do illicit economies arise and how are they organized? What are the regulatory requirements for their functioning? and What threats do illicit economies pose to countries?

In exploring these questions, the article analyzes the role of several agents: the role of the state and its representatives and the effects of their policies toward illicit economies; the relationship between local populations participating in the illicit economy and anti-state belligerents; and the interactions between criminal networks and belligerents. Felbab-Brown examines these dynamics primarily with respect to India and China both contemporarily and historically, but also draws on other countries for comparisons. In the empirical part, the article explores among other issues the Hong Kong Triads, piracy in South China Sea, the insurgencies in India’s Northeast and drug smuggling and illegal trade in wildlife there, poppy cultivation in India, and Chiang Kai-Shek, Mao, and the Green Gang’s counternarcotics policies and patricipation in the drug trade.

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