Macroeconomics, Trade, and Investment Global Practice
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economic growth, economic integration, international trade policy, economic competitiveness, fiscal policy, technology development, financial sector development, gender and development
Macroeconomics, Trade, and Investment Global Practice
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Last updated January 31, 2023
Sanjay Kathuria is Adjunct Professor, Georgetown University; Visiting Faculty, Ashoka University; Senior Visiting Fellow at the Centre for Policy Research, India; and Non-Resident Senior Fellow at the Institute of South Asian Studies, Singapore. Earlier, he was a Lead Economist at the World Bank in Washington, D.C. Sanjay Kathuria is one of the leading thinkers and commentators on economic integration in South Asia and the economic development of the region. In 27 years at the World Bank, from 1992 to 2019, he worked in South Asia, Latin America and the Caribbean, and Eastern Europe, including field assignments in New Delhi and Dhaka. Before joining the World Bank, he was a Fellow at the Indian Council for Research on International Economic Relations in New Delhi, from 1982-1992.
Publication Search Results
Now showing 1 - 8 of 8
Publication(World Bank, Washington, DC, 2012-08) De, Prabir ; Raihan, Selim ; Kathuria, SanjayThe 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.
Publication(World Bank, Washington, DC, 2005-06) Kathuria, Sanjay ; Rouis, Mustapha ; Corlett, Michael ; Hanson, James ; Oberai, Rina H. ; Tomlinson, Kevin ; Ruppert Bulmer, Elizabeth ; Blom, Andreas ; Jha, Abhas ; Nuamah, Camille ; Brenzel, LoganThe Caribbean region is at a development crossroads and its member nations must take significant and concrete steps to improve productivity and competitiveness and face up to global competition if they are to accelerate or even maintain past growth, says a new World Bank report1. By taking such steps, they will reposition themselves strategically as an emerging trading bloc for goods and services; without such action, they risk growing economic marginalization and erosion of many of the social gains of the last three decades.
Publication(Washington, DC : World Bank, 2008) Kathuria, SanjayThe report suggests that improving and sustaining export performance and thereby gross domestic product (GDP) growth will require sustained improvement in foreign direct investment (FDI) inflows, pointing again to the need for significant structural reform. Despite recent increases, FDI inflows in South East Europe 5 (SEE5) remain low and below potential. The onus for encouraging FDI falls on structural reforms, given the above limits on both fiscal and monetary policy. Deeper integration within Central European free trade area (CEFTA) countries will increase market size, improve service quality, and help attract FDI. Deeper integration among SEE countries such as through the completion of the implementation of CEFTA 2006, the reduction of border frictions through the establishment of a single management of Border crossing points, the regionalization of the rules of origin among CEFTA 2006 countries, and the expansion of SEE participation in pan European/Mediterranean cumulating of origin arrangements (an ongoing process) will contribute to market contestability and the development of a larger market, thereby helping to attract FDI. Deeper integration among CEFTA countries in services could also contribute to improving service quality significantly, thereby enhancing the overall productivity of the economies. This report mentions several areas, in different sectors, where there can be opportunities for regional harmonization and cooperation, including those areas where the agenda is defined by commitments to the acquis.
Publication(World Bank, Washington, DC, 2001-11) Kathuria, Sanjay ; Martin, Will ; Bhardwaj, AnjaliThe authors provide a simple introduction to the economics of the Multifibre Arrangement (MFA) and use available empirical evidence to examine its impact on exports of garments and textiles, focusing on India. Their review of the basic economics of the MFA shows the discriminatory character of the Arrangement. While exporting countries can gain from quota rents, much of this gain is likely to be offset by losses in exports to unrestricted markets, through waste resulting from domestic rent-seeking behavior, or shared with industrial country importers. Moreover, the restrictions curtail the ability of countries to generate sorely needed employment in the labor-intensive garment and textile sectors. Recent estimates for India of the export tax equivalents of the quotas suggest that they increased in 1999, after a couple of years around lower levels. The authors also examine the domestic policy distortions affecting the industry in India. While the abolition of quotas on international trade in textiles in 2005 will create opportunities for developing countries, it will also expose them to additional competition from other, formerly restrained exporters. The outcome for any country will depend on its policy response. Countries that use the opportunity to streamline their policies and improve their competitiveness are likely to increase their gains from quota abolition. Modeling results suggest that South Asia as a whole will gain from quota abolition, although different countries may experience different results. Unambiguously, however, the gains from domestic reform will increase after the abolition of the quota arrangement.
Publication(World Bank, Washington, DC, 2015-04) Kathuria, Sanjay ; Shahid, Sohaib ; Ferrantino, Michael JosephAs the momentum for multilateral trade liberalization has slowed, an increasing amount of liberalization is taking place at a regional level. As of April 2015, there are 406 regional trade agreements (RTAs) in force worldwide, more than double the number in force in 2000. These agreements cover over half of international trade. Countries engage in regional cooperation for a variety of reasons. First, it is easier to achieve agreement among a small number of regional partners than it is globally. Second, regional cooperation takes advantage of existing natural tendencies for regional trade that arise from geography and shared culture. This reinforces the regional division of labor already taking place among firms. Global value chains, in which lead firms organize a division of labor for complex products among many countries, often turn out to have a regional focus. Think, for example, of the electronics value chain in East Asia, and the automotive value chains focused on the United States, Germany, and Japan. South Asia itself is a small but growing part of value chains in textiles and apparel with both regional depth and cross-linkages to East Asia. This piece will focus on four aspects of trade liberalization (trade facilitation, non-tariff measures/barriers, intra-regional investment, and energy cooperation) that go beyond traditional preferential tariff reduction to illustrate both the potential of south-south liberalization and some of the particular challenges faced by South Asia. There is widespread agreement that deeper regional engagement in these areas will benefit the people of South Asia.
Publication(World Bank, Washington, DC, 2019-03) Kathuria, Sanjay ; Mathur, PriyaAround the world, trade has played a critical role in reducing poverty. Some of the most successful countries in East Asia, Europe, and North America owe much of their success to strong trade relations with their neighbors. However, South Asian countries have yet to reap the benefits of proximity. Intraregional trade accounts for a little more than 5 percent of South Asia’s total trade, compared with 50 percent in East Asia and the Pacific and 22 percent in Sub-Saharan Africa.The World Bank’s recent report, A Glass Half Full: The Promise of Regional Trade in South Asia, clearly illustrates the gaps between current and potential trade in South Asia.The force of gravity—the degree of trade attraction between countries—is also manifest in high levels of informal trade. Informal trade has been estimated at 50 percent of formal trade in South Asia, aggregating assessments of various studies covering the 1993 to 2005 period.The large gaps between actual and potential trade arise because South Asian trade regimes discriminate against each other. This can be shown through an index of trade restrictiveness. Based on global trade data, such an index generates an implicit tariff that measures a country’s tariff and non-tariff barriers on imports. In India, Pakistan, and Sri Lanka, the index is two to nine times higher for imports from South Asia than from the rest of the world.Moreover, although the average burden of non-tariff measures may not appear high, it is high for specific product and market combinations in South Asia. It varies from over 75 percent to over 2,000 percent. Sri Lanka consistently appears on the list of product-market combinations with the highest trade restrictiveness index in the region. Barriers that have held back trade and investment within South Asia include tariffs and para tariffs, real and perceived non-tariff barriers, connectivity costs as manifested in the cost of air travel, and the broader trust deficit.
Publication(Washington, DC: World Bank, 2021-11-17) Kathuria, Sanjay ; Yatawara, Ravindra A. ; Zhu, Xiao’ouRegional economic engagement within South Asia may gain increasing importance owing to several factors that are currently in play, including strategies to diversify global value chains and locate such value chains nearer home. These developments offer South Asia a chance to enhance its low levels of regional economic engagement and capitalize on significant unrealized development opportunities. This report shows that examining intraregional investment and knowledge connectivity enhances our understanding of the low levels of intraregional trade and limited regional value chains in South Asia. Creating a new and unique data set for South Asian investment, it provides a detailed and nuanced understanding of the drivers of outward investment, both regional and global, for South Asian firms. “Regional Investment Pioneers in South Asia” provides key considerations for policy makers in South Asia, which remain particularly relevant in the aftermath of the pandemic. First, it makes a case for regulatory relaxation of outward FDI regimes, based on new micro foundations, grounded in value chains. Second, it spells out details of smart inward FDI promotion techniques and investment facilitation. Third, it identifies distinct cross-border information-enhancing and network development activities. Fourth, it suggests that digital connectivity and continued interventions in reducing trade costs are warranted to increase investment as well as trade flows. There is particular scope to build on the digitalization initiatives in trade and investment facilitation taken during the pandemic. “Regional Investment Pioneers in South Asia” follows on, and is complementary to, the earlier World Bank report, “A Glass Half Full: the Promise of Regional Trade in South Asia.”
Publication(Washington, DC: World Bank, 2018-09-19) Kathuria, Sanjay ; Kathuria, SanjayTrade has played a critical role in global poverty reduction. In harnessing the potential of trade, some of the most successful countries have developed strong trade relationships with their neighbors. However, many South Asian countries have trade regimes that often offset the positive impact of geography and proximity. This report documents systematically the gaps between current and potential trade in South Asia and addresses important specific barriers that have held trade back. These barriers include tariffs and paratariffs, real and perceived nontariff barriers, connectivity costs, and the broader trust deficit. This policy-focused report unpacks these critical barriers to effective trade integration in South Asia through four in-depth studies that produce new, detailed, on-the-ground knowledge. Three of the studies are based on extensive stakeholder consultations. Two also rely on tailored surveys. The fourth study, on tariffs, benefits from new data on paratariffs. The report also marshals new evidence showing how trading regimes in South Asia discriminate against each other. Given the South Asian context, incremental, yet concrete steps aimed at tapping the potential of deeper integration are appropriate. The report has been drafted in this spirit. It offers precise, actionable policy recommendations that could help achieve measurable progress in key areas of trade and integration that would be to the advantage of all countries in the region.