IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v26y2003i8p1187-1214.html
   My bibliography  Save this article

India's Informal Trade with Bangladesh: A Qualitative Assessment

Author

Listed:
  • Sanjib Pohit
  • Nisha Taneja

Abstract

The large and vibrant informal trade between India, and Bangladesh continues to thrive despite unilateral/regional/multilateral trade liberalisation in these two countries. This calls for an in‐depth analysis of India's informal trade with Bangladesh. Using insights from the New Institutional Economics informal and formal institutions engaged in cross‐border trade are contrasted to examine whether informal trading arrangements provide better institutional solutions. The analysis, carried out on the basis of an extensive survey conducted in India and Bangladesh reveals that informal traders in India and Bangladesh have developed efficient mechanisms for contract enforcement, information flows, risk sharing and risk mitigation. Further, informal traders prefer to trade through the informal channel because the transaction costs of trading in the informal channel are significantly lower than the formal channel implying that informal trade takes place due to the inefficient institutional set up in the formal channel. The principal policy implication from the study is that unless the transacting environment of formal traders improves, informal trade will continue to coexist with formal trade, even if free trade is established in the SAARC region.

Suggested Citation

  • Sanjib Pohit & Nisha Taneja, 2003. "India's Informal Trade with Bangladesh: A Qualitative Assessment," The World Economy, Wiley Blackwell, vol. 26(8), pages 1187-1214, August.
    • Handle: RePEc:bla:worlde:v:26:y:2003:i:8:p:1187-1214
    DOI: 10.1111/1467-9701.00568
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-9701.00568
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-9701.00568?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nabli, Mustapha K. & Nugent, Jeffrey B., 1989. "The New Institutional Economics and its applicability to development," World Development, Elsevier, vol. 17(9), pages 1333-1347, September.
    2. Assaad, Ragui, 1993. "Formal and informal institutions in the labor market, with applications to the construction sector in Egypt," World Development, Elsevier, vol. 21(6), pages 925-939, June.
    3. Bardhan, Pranab, 1989. "The new institutional economics and development theory: A brief critical assessment," World Development, Elsevier, vol. 17(9), pages 1389-1395, September.
    4. Yifu Lin, Justin & Nugent, Jeffrey B., 1995. "Institutions and economic development," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 38, pages 2301-2370, Elsevier.
    5. Sudhakar K. Chaudhari, 1995. "Cross border trade between India & Bangladesh," NCAER Working Papers 58, National Council of Applied Economic Research.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kumar, Sushil & Ahmed, Shahid, 2014. "Growth and Pattern of Intra-Industry Trade between India and Bangladesh: 1975–2010," MPRA Paper 61113, University Library of Munich, Germany, revised 29 Dec 2014.
    2. Raihan, Selim, 2011. "Economic Corridors in South Asia: Exploring the Benefits of Market Access and Trade Facilitation," MPRA Paper 37883, University Library of Munich, Germany.
    3. Nisha Taneja, 2007. "India's Informal Trade With SriLanka," Working Papers id:953, eSocialSciences.
    4. Anisul M. Islam, 2019. "Bangladesh Trade with India: Trends and Patterns," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 5(2), pages 123-140, April.
    5. Sajeda Amin & Alaka Basu & Rob Stephenson, 2002. "Spatial variation in contraceptive use in Bangladesh: Looking Beyond the borders," Demography, Springer;Population Association of America (PAA), vol. 39(2), pages 251-267, May.
    6. Andreas Buehn & Mohammad Reza Farzanegan, 2012. "Smuggling around the world: evidence from a structural equation model," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 3047-3064, August.
    7. Hossain, Sharif M., 2009. "South Asian Free Trade Area: Implications for Bangladesh," MPRA Paper 18517, University Library of Munich, Germany.
    8. M.Govinda Rao, 2007. "Peace, Progress and Prosperity in the Northeastern Region: Vision 2020: Volume I," Working Papers id:1211, eSocialSciences.
    9. Anisul M. Islam, 2018. "Inter- and Intra-industry Trade Relations between Bangladesh and India: Empirical Results," FIIB Business Review, , vol. 7(4), pages 280-292, December.
    10. Rahman, Mohammad Mafizur, 2005. "Bangladesh-India Bilateral Trade: Causes of Imbalance and Measures for Improvement," Working Papers 1, University of Sydney, School of Economics.
    11. Kubo, Koji, 2016. "Myanmar's cross-border trade with China : beyond informal trade," IDE Discussion Papers 625, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    12. Raihan, Selim, 2012. "SAFTA and the South Asian Countries: Quantitative Assessments of Potential Implications," MPRA Paper 37884, University Library of Munich, Germany.
    13. Zahoor A. Rather, 2013. "India–Bangladesh Border Issues," International Studies, , vol. 50(1-2), pages 130-144, January.
    14. Suresh Moktan, 2008. "Evaluating the Intra–regional Exports and Trade Creation and Trade Diversion Effects of Trade Agreements in SAARC Countries," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 9(2), pages 233-260, September.
    15. United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) South and South-West (ed.), 2012. "Regional Cooperation for Inclusive and Sustainable Development: South and South-West Asia Development Report 2012-2013," SSWA Books and Research Reports, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) South and South-West Asia Office, number brr4, May.
    16. Selim Raihan, 2015. "South Asian Economic Union," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 16(2_suppl), pages 3-18, September.
    17. Rafat MAHMOOD & Eatzaz AHMAD, 2015. "Measurement Of Import Smuggling In Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 25(2), pages 135-159.
    18. Patricia Sourdin & Richard Pomfret, 2012. "Trade Facilitation," Books, Edward Elgar Publishing, number 14596.
    19. Nisha Taneja & Samridhi Bimal & Isha Dayal, 2016. "India’s Informal Trade with Pakistan," Working Papers id:11076, eSocialSciences.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nisha Taneja, 2007. "India's Informal Trade With SriLanka," Working Papers id:953, eSocialSciences.
    2. Taneja, Nisha & Pohit, Sanjib, 2001. "India’s Informal Trade with Nepal: An Exploratory Assessment," MPRA Paper 94864, University Library of Munich, Germany.
    3. Pohit, Sanjib, 2007. "Lacuna in Trade Facilitation & Informalisation of Trade: Lesson from India-Bangladesh Trade," MPRA Paper 94964, University Library of Munich, Germany.
    4. Kherallah, Mylène & Kirsten, Johann, 2001. "The new institutional economics," MSSD discussion papers 41, International Food Policy Research Institute (IFPRI).
    5. Ashok Chakravarti, 2012. "Institutions, Economic Performance and the Visible Hand," Books, Edward Elgar Publishing, number 14751.
    6. Tim Goydke, 2011. "Institutional Change and the Role of Government: Technology Policy in Japan and Korea," Chapters, in: Werner Pascha & Cornelia Storz & Markus Taube (ed.), Institutional Variety in East Asia, chapter 4, Edward Elgar Publishing.
    7. McMahon, Gary, 1997. "Applying economic analysis to technical assistance projects," Policy Research Working Paper Series 1749, The World Bank.
    8. Pal, Suresh, 2021. "Institutions, Supply Chains and Resource Management for Agricultural Development," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 0(Number 1), March.
    9. Prévost, Benoît & Rivaud, Audrey, 2018. "The World Bank’s environmental strategies: Assessing the influence of a biased use of New Institutional Economics on legal issues," Ecosystem Services, Elsevier, vol. 29(PB), pages 370-380.
    10. Takane, Tsutomu, 2000. "Incentives Embedded in Institutions: The Case of Share Contracts in Ghanaian Cocoa Production," The Developing Economies, Institute of Developing Economies, Japan External Trade Organization(JETRO), vol. 38(3), pages 374-397, September.
    11. Fuentes, Gabriel A., 1998. "Middlemen and agents in the procurement of paddy: Institutional arrangements from the rural Philippines," Journal of Asian Economics, Elsevier, vol. 9(2), pages 307-331.
    12. Palau, Hernan & Jatib, Ines, 2003. "Constraints and Limitations to the Design and Implementation or Origin and Quality Assurance Systems for Argentine Beef," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 6(2), pages 1-20.
    13. Nugent, Jeffrey B., 2011. "Institutions and development: generalizations that endanger progress," Journal of Institutional Economics, Cambridge University Press, vol. 7(4), pages 561-565, December.
    14. Jean‐Philippe Platteau, 1996. "The Evolutionary Theory of Land Rights as Applied to Sub‐Saharan Africa: A Critical Assessment," Development and Change, International Institute of Social Studies, vol. 27(1), pages 29-86, January.
    15. Holvoet, Nathalie, 2003. "Household matters: on the usefulness of an institutional approach for understanding intrahousehold allocation," IOB Discussion Papers 2003.03, Universiteit Antwerpen, Institute of Development Policy (IOB).
    16. Selly Amal-Kerim & Hélène Rey-Valette & Francoise Seyte & Dorothé Boccanfuso, 2015. "A subjective view of governance indicators," Working Papers 15-10, LAMETA, Universtiy of Montpellier, revised Oct 2015.
    17. Roberto Dell'Anno & Adalgiso Amendola, 2008. "Istituzioni, Diseguaglianza ed Economia Sommersa: quale relazione?," Quaderni DSEMS 24-2008, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.
    18. Gabre-Madhin, Eleni Z., 2001. "Market institutions, transaction costs, and social capital in the Ethiopian grain market:," Research reports 124, International Food Policy Research Institute (IFPRI).
    19. Kumar, Sushil & Ahmed, Shahid, 2014. "Growth and Pattern of Intra-Industry Trade between India and Bangladesh: 1975–2010," MPRA Paper 61113, University Library of Munich, Germany, revised 29 Dec 2014.
    20. Aggarwal, Rimjhim M., 2006. "Globalization, local ecosystems, and the rural poor," World Development, Elsevier, vol. 34(8), pages 1405-1418, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:26:y:2003:i:8:p:1187-1214. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.