Asia-Pacific Development Journal Vol. 21, No. 2, December 2014 INDO-NEPAL ECONOMIC COOPERATION: A SUBREGIONAL PERSPECTIVE Neetu Choudhary and Abhijit Ghosh* The present paper explores how a subregional engagement with bordering regions can stimulate economic cooperation among countries in the context of low levels of trade within the South Asian subregion. With special reference to shared historical legacy and culture-driven interaction — formal and informal — between Nepal and the state of Bihar in India, the paper develops a SWOT (strength, weakness, opportunity and threat) framework to rationalize and reflect on the need for a subregional perspective towards promotion of regional cooperation. With complementary applications of secondary data and field research, it shows how irrespective of formal country-level initiatives, Nepal and Bihar have engaged in successful economic partnerships and argues that those existing nodes represent the potential for greater subregional and regional economic cooperation. The paper also offers insights into formal and informal challenges and policy imperatives associated with the operationalization of the new perspective. JEL Classification: F100, F140, F150, F420. Key words: Nepal, Bihar, informal, trade, subregional perspective, economic cooperation. * Neetu Choudhary (e-mail:
[email protected]) and Abhijit Ghosh (e-mail: abhijitghosh
[email protected]) are assistant professors of economics in the Division of Economics, A N Sinha Institute of Social Studies, Patna, Bihar, India. This paper is based on background research conducted by the A N Sinha Institute of Social Studies, Patna in partnership with the Centre for Policy Research, New Delhi. It incorporates inputs from deliberations of the Brainstorming Workshop on Indo-Nepal Economic Cooperation, organized by the A N Sinha Institute of Social Studies, Patna on 16 July 2014.