Posted in action, Drama, economics, foreign policy, institutions, macro, movies, music, Rights, rock, thriller, War crimes by jrahman on August 10, 2012

Seven trashes collected by the senses.


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On economic integration with India

Posted in development, economics, foreign policy, India by jrahman on July 3, 2012

Updates over the fold: 5 July 1222 BDT

A few weeks ago, when its stocks went public, I quipped in facebook that the company’s valuation was about the same size as Bangladesh’s economy.*  A friend commented something to the effect that Bangladeshi economy would be much larger if only it was integrated with India.  Now, this friend of mine is a PhD student in a major western university, and has worked in positions that can affect policy and politics in Bangladesh.  When people like him believe Bangladesh is missing out on some magic GDP by not being sufficiently integrated with India, one has to think seriously.

One doesn’t have to look very hard for the source of this belief.  People like Farooq Sobhan of BEI or Mustafizur Rahman of CPD have claimed publicly in the past that economic integration with India would raise growth rate to 8% or more.  Sobhan was actually quoted in the Economist thus.  The thing is, I’ve never seen any economic modelling that shows exactly how growth rate would jump by ‘full economic integration’ with India.

In fact, I’ve never seen any proper, academic work that explains what the full economic integration actually means when it comes to India and Bangladesh. Of course, I don’t presume to know everything that has been written about the subject. I shall be much obliged if someone can point me to some literature on this. And as a card carrying (neo)liberal economist, I am fully signed up to the idea of free trade and factor mobility — so if economic integration means open borders, then I am all for it even if growth remains at 6-7% rather than 8%.

But I am quite sceptic about economic integration with India raising the growth rate.