[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/94864.html
   My bibliography  Save this paper

India’s Informal Trade with Nepal: An Exploratory Assessment

Author

Listed:
  • Taneja, Nisha
  • Pohit, Sanjib
Abstract
The large and vibrant informal trade between India and Nepal continues to thrive despite unilateral/bilateral/regional/multilateral trade liberalisation in the two countries. This calls for an indepth analysis of India's informal trade with Nepal. Using insights from the New Institutional Economics informal and formal institutions engaged in cross-border trade are contrasted. The objective in juxtaposing formal and informal institutions in performing similar transactions viz., engaging in crossborder international trade is threefold: first, to understand how informal trading markets function vis-à-vis formal trading arrangements second, to analyse formal and informal trading arrangements particularly in the context of the relative importance of institutional factors vis-à-vis trade and domestic policy distortions, and third, to see whether informal trading arrangements provide better institutional solutions than formal trading arrangements. The analysis, carried out on the basis of an extensive survey conducted in India and Nepal reveals that informal traders in India and Nepal 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. Moreover, lower education levels of informal traders could be an important deterrent for using the formal channel. Finally, the analysis of discriminating characteristics of formal and informal traders in India and Nepal indicates that transaction cost and education level are the two common discriminating factors. An important 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

  • Taneja, Nisha & Pohit, Sanjib, 2001. "India’s Informal Trade with Nepal: An Exploratory Assessment," MPRA Paper 94864, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:94864
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/94864/1/MPRA_paper_94864.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    2. Alan Deardorff & Wolfgang Stolper, 1990. "Effects of smuggling under african conditions: A factual, institutional and analytic discussion," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 126(1), pages 116-141, March.
    3. 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.
    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. 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.
    6. Bardhan, Pranab, 1989. "The new institutional economics and development theory: A brief critical assessment," World Development, Elsevier, vol. 17(9), pages 1389-1395, September.
    7. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
    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. Neetu Choudhary & Abhijit Ghosh, 2014. "Indo-Nepal economic cooperation: a subregional perspective," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 21(2), pages 23-52, December.
    2. Bhattacharyya, Anushree & Chakraborty, Debashis, 2010. "India’s Recent Infrastructure Development Initiatives: A Comparative Analysis of South and Southeast Asia," MPRA Paper 23030, University Library of Munich, Germany.

    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. 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.
    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. 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.
    6. 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.
    7. Wang, Sen & Bogle, Tim & van Kooten, G. Cornelis, 2012. "Forestry and the New Institutional Economics," Working Papers 130818, University of Victoria, Resource Economics and Policy.
    8. Olsson, Ola, 2000. "A Microeconomic Analysis of Institutions," Working Papers in Economics 25, University of Gothenburg, Department of Economics.
    9. Gérard Grellet & Naîma Grellet, 1999. "Développement des marchés et coûts de transaction. Une critique des politiques économiques libérales," Revue Tiers Monde, Programme National Persée, vol. 40(157), pages 37-49.
    10. Ashok Chakravarti, 2012. "Institutions, Economic Performance and the Visible Hand," Books, Edward Elgar Publishing, number 14751.
    11. Jean-Roger Essombe Edimo, 1998. "Dynamique financière des tontines : quels enseignements pour le financement des petites entreprises en Afrique ?," Revue Tiers Monde, Programme National Persée, vol. 39(156), pages 861-883.
    12. 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.
    13. Roger R. Betancourt, 1991. "The New Institutional Economics and the Study of the Cuban Economy," Annual Proceedings, The Association for the Study of the Cuban Economy, vol. 1.
    14. Ewelina Mruk & Inmaculada Aguiar-Díaz & Maria Victoria Ruiz-Mallorquí, 2019. "Use of formal insolvency procedure and judicial efficiency in Spain," European Journal of Law and Economics, Springer, vol. 47(3), pages 435-470, June.
    15. Eunice Omolola Olaniyi & Marti Viirmäe, 2016. "The Economic Impact of Environmental Regulations on a Maritime Fuel Production Company," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 8(2).
    16. Lundström, Susanna, 2003. "Effects of Economic Freedom on Growth and the Environment - Implications for Cross-Country Analysis," Working Papers in Economics 115, University of Gothenburg, Department of Economics.
    17. Darcy W E Allen, 2020. "When Entrepreneurs Meet:The Collective Governance of New Ideas," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number q0269, December.
    18. 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.
    19. Petr Vymětal & Milan Žák, 2005. "Instituce a výkonnost [Institutions and performance]," Politická ekonomie, Prague University of Economics and Business, vol. 2005(4), pages 545-566.
    20. Ben Yu & Daigee Shaw & Tsu-Tan Fu & Lawrence Lai, 2000. "Property rights and contractual approach to sustainable development," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 3(3), pages 291-309, September.

    More about this item

    Keywords

    Trade; Transaction cost; Institutional arrangements;
    All these keywords.

    JEL classification:

    • F19 - International Economics - - Trade - - - Other

    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:pra:mprapa:94864. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.