Resource information
Deeper regional integration can be
beneficial especially for regions along international
borders. It can open up new markets on opposite sides of
borders and give consumers wider access to cheaper goods.
This paper uses data from five contiguous districts of
India, Nepal, and Bangladesh in the northeast of the
subcontinent to measure the degrees of trade complementarity
between districts. The paper illustrates that the regions
are underexploiting the potential of intraregional commerce.
Price wedges of up to 90 percent in some important
consumption products along with measures of complementarity
between households' production and consumption suggest
the potential for relatively large gains from deeper trade
integration. Furthermore, an examination of a specific
supply chain of tea highlights factors that help industries
scale up, aided by institutions such as an organized auction
and decent physical and legal infrastructure. However,
districts alike in geography but located across
international boundaries face different development
prospects, suggesting that gains from reduced
"thickness of borders" would not accrue
automatically. Much rests on developing intrinsic industry
competitiveness at home, including the reform of regulatory
and business practices and infrastructural bottlenecks that
prevent agglomeration of local economies.
