An analysis of informal cross border trade of goods and services between Nepal and India

Abstract

activities are increasing due to various factors such as easy access, price differences, cultural similarities, and family ties. Informal Cross Border Trade (ICBT) flourishes in areas with poor border regulation, as residents exploit their geographical knowledge. This study focuses on ICBT between Nepal and India, examining its nature and impact on household income. The study aims to identify the types of goods and services involved in ICBT and analyze its impact on household income. Data was collected through structured questionnaires from 204 respondents in border areas. The methodology employed both descriptive and quantitative approaches. Descriptive analysis included data visualization techniques to present the types of goods and services. Quantitative analysis utilized multiple linear regression to examine the strength of relationship between ICBT participation and household income. Additionally, correlation analysis (chi-square test) was performed to assess the relationship between the variables. Furthermore, ANOVA was also done for overall significance of the regression model.The analysis revealed that daily consumable goods, including fast-moving consumer goods (FMCG), agricultural products, and intermediate goods, dominated ICBT. Correlation analysis showed a weak negative correlation between household income and frequency of ICBT, suggesting that such trade often arises from necessity rather than opportunity. Regression analysis indicated that certain types of trade are associated with lower household income, while specific family structures (presumably joint families) are linked to higher household income. This finding highlights the importance of family dynamics in economic strategies within border regions. Policy implications suggest a need for a nuanced approach to border management, considering the economic realities of border communities. Efforts to formalize trade should be balanced with measures to support alternative livelihoods. The study recommends further investigation into the long-term economic and social impacts of ICBT on border communities. Policymakers should consider targeted interventions to address the root causes of ICBT while promoting formal trade channels. Key Words: Porous Border, ICBT, Goods and Services, Household Income.