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Unlocking Bangladesh-India trade : emerging potential and the way forward (English)

The primary objective of this study is to analyze the impact on Bangladesh of increased market access in India, both within a static production structure and also identifying dynamic gains. The study shows that Bangladesh and India would both gain by opening up their markets to each other. Indian investments in Bangladesh will be very important for the latter to ramp up its exports, including products that would broaden trade complementarity and enhance intra-industry trade, and improve its trade standards and trade-handling capacity. A bilateral Free Trade Agreement would lift Bangladesh's exports to India by 182 percent, and nearly 300 percent if transaction costs were also reduced through improved connectivity. These numbers, based on existing trade patterns, represent a lower bound of the potential increase in Bangladesh's exports arising from a Free Trade Agreement. A Free Trade Agreement would also raise India's exports to Bangladesh. India's provision of duty-free access for all Bangladeshi products (already done) could increase the latter's exports to India by 134 percent. In helping Bangladesh's economy to grow, India would stimulate economic activity in its own eastern and north-eastern states. Challenges exist, however, including non-tariff measures/barriers in both countries, excessive bureaucracy, weak trade facilitation, and customs inefficiencies. Trade in education and health care services offers valuable prospects, but also suffers from market access issues. To enable larger gains, Bangladesh-India cooperation should go beyond goods trade and include investment, finance, services trade, trade facilitation, and technology transfer, and be placed within the context of regional cooperation.

Details

  • Author

    De,Prabir, Kathuria,Sanjay, Raihan,Selim

  • Document Date

    2012/08/01

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS6155

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    India,

    Bangladesh,

  • Region

    South Asia,

  • Disclosure Date

    2012/08/01

  • Disclosure Status

    Disclosed

  • Doc Name

    Unlocking Bangladesh-India trade : emerging potential and the way forward

  • Keywords

    bilateral free trade agreement;bilateral trade;Trade and Economic Growth;Trade and Transport Facilitation;direction of trade statistic;macroeconomic point of view;partial equilibrium model;education and health;bilateral trade flow;benefits of trade;trade in goods;import of goods;foreign direct investment;trade in services;economies of scale;trade diversion effect;market access issues;trade diversion cost;barriers to trade;machinery and equipment;fabrics of cotton;Intra-regional Trade;real trade costs;general equilibrium model;current account deficit;Computable General Equilibrium;basket of good;market access offers;degree of competition;bilateral trade barriers;special economic zone;free trade regime;trade and investment;trade and transportation;increased market access;foreign exchange traders;exports of leather;effect of trade;rules of origin;cost of service;general equilibrium interactions;net trade creation;gross domestic product;preferential trade arrangement;enhanced market access;factor of production;unilateral trade liberalization;regional trade agreement;Higher Education;gravity model;simulation result;high trade;disaggregated level;production network;transaction cost;border crossing;cotton yarn;Education Services;trade standard;small country;production block;total trade;consumption abroad;electrical machinery;Medical Insurance;removing barriers;vegetable oil;paper product;trading partner;improved connectivity;export data;trade product;transport equipment;plastic products;coal product;metal product;scale economy;regional cooperation;ferrous metal;multilateral development;negotiating position;trade diverting;domestic reform;political interest;food product;asian students;manufacturing production;vertical specialization;export dynamism;explicit tax;foreign student;mutual recognition;educational service;educational institution;commercial presence;weighted tariff;leather products;improved service;sea transport;mineral product;tobacco product;electronic equipment;air transport;wood product;aggregate data;primary source;welfare gains;joint communique;road map;economic relation;secondary data;single tariff;Trade Policy;Trade Policies;ministerial meeting;education curriculum;crossing border;asian countries;electricity trade;medical facility;medical service;air fare;medical institutions;local demand;health infrastructure;factor endowment;scale effect;fragmented production;export structure;explanatory variable;independent variable;sample period;comparative assessment;export price;import growth;trade surplus;import demand;net export;rice bran;slide fastener;market structure;preferential removal;trade tariff;border infrastructure;household welfare;labor-intensive sectors;facilitating trade;administrative capacity;unilateral liberalization;trading arrangement;real income;transport cost;land border;political will;global trade;manufactured goods;rural area;cross-border transaction;poor infrastructure;Informal Economy;landlocked country;tariff preference;foreign competition;domestic competitor;world price;production structure;duty-free access;dynamic gains;care service;goods trade;trade pattern;Technology Transfer;development policy;surgical equipment;research assistance;open access;cost elements;trade theory;welfare effect;multilateral arrangement;multilateral trade;multilateral liberalization;positive impact;international interest;world market;increased trade;world trade;high share;global economy;ceramic products;land cost;formal trade;social activities;border area;accelerating growth;textile articles;increasing share;transmission shaft;state visit;production process;tariff concession;staple fibres;raw material;reduce trade;nuclear reactor;aggregation bias;textile fibres;essential oil;local condition;primary product;textile materials;tariff liberalization;cereal grain;base year;high concentration;manufactured products;traded goods;export base;global export;reducing transaction;product differentiation;

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Citation

De,Prabir Kathuria,Sanjay Raihan,Selim

Unlocking Bangladesh-India trade : emerging potential and the way forward (English). Policy Research working paper ; no. WPS 6155 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/110181468050986302/Unlocking-Bangladesh-India-trade-emerging-potential-and-the-way-forward