Informal Trade in the SAARC region

This paper explores issues relating to informal trade in the SAARC region. It spells out the reasons underpinning illegal trade in the South Asian region. Further it focuses on the estimated size and composition of informal trade in the region and highlights its relationship to formal trade. The study examines the modalities under which such trade prospers. It analyses the impact of tariff and non-tariff barriers on informal trade and also considers the implications of transportation costs and other costs that influence informal trade. The possible impact of domestic policy distortions on illegal trade have also been looked into. The study probes into the extent to which Regional Co-operation in South Asia will influence the shift of illegal trade flows to legal channels. [Working Paper No. 47]