Ever since the idea of Bangladesh-China-India-Myanmar (BCIM) economic corridor was conceived, it had been felt that the Indian interest has been lower than expected. However, China has always expressed its interest to develop the economic corridor at a brisk pace.

Embedded in the Chinese scheme is the plan to develop its border regions of the Yunnan province within the economic bloc.

Developing the BCIM economic corridor makes sense for the other nations involved in the corridor. Countries making up BCIM account for nearly 29 per cent of the world’s population.

Moreover, the growing middle class with increasing per capita income levels in the region presents a huge market in case a free-trade zone is developed. It also presents an enormous opportunity for trading activities.

Acting as a new major link between the teeming South Asia and South-East Asia regions, the corridor, linking Kunming city (the capital of Yunnan province) with Kolkata, the largest metropolitan in eastern India, provides a multi-dimensional development potential from trade, finance and other service sector growth perspectives. This will also be critical for development of the north-eastern Indian States.

A positive externality of BCIM economic corridor will be enhanced intra-regional trade in the corridor and trading by the corridor economies with the rest of the world.

The domain of international trade and finance is fraught with risks from at least three specific directions: commodity price, currency and interest rate.

China and India have created market infrastructure institutions such as commodity derivatives to combat the risks inherent in international commodity trading.

Looking at the successes of China and India in the domain of developing commodity derivatives, Bangladesh is also planning to create onecontemplating of creating one.

However, such market infrastructure institutions (MII) like commexes have been designed in China and India keeping in view the national level interests confined to the national boundaries.

For the trading bloc of BCIM to develop, it is important, therefore, that a trans-national commodity exchange be developed for various reasons.

First, such an exchange will help various stakeholders of the BCIM to hedge their risks in a derivatives market platform, and that too with a range of sophisticated instruments fitting their needs.

Second, this will help in regional price discovery. In the process, nations in the region might emerge as price-makers of some critical commodities in which they are the leading consumers or producers.

This will make them challenge the hegemony of the commodity exchanges in Western economies in global price making for those commodities.

Third, trading in the commodity derivatives will help in rationalisation of the commodity value chain. There are already instances in China and India on this count.

In the domain of agri-value chain, and value chain in some industrial commodities, derivatives trading has helped in creating additional marketing channel in the value chain.

Fourth, there are evidences of how development of market infrastructure institutions helped in development of a region and trading blocs, as can be witnessed in the very early development of the Chicago Board of Trade.

Fifth, a trans-national commex will help in development of other forms of level infrastructure such as warehousing, assaying, quality testing facilities, etc which will lead to the development of an trans-national food granary.

Sixth, rationalisation of the marketing channels and development of regional level infrastructure will help in attaining regional food security.

Seventh, such an MII will be the catalyst for greater regional cooperation from the social and cultural perspectives.

While Kolkata-Cunming car rally is a good beginning from track-2 diplomacy perspective, a regional level MII is an important catalyst for promoting a cooperative framework for economic and cultural interaction on the one hand, and also for developing a framework for sustainable development for the region.

One needs to recognise here that inherently embedded in politics is economics. The two forces render themselves to bi-directional causality.

A trans-national MII, though an economic institution when viewed through the lens of reductionist neoclassicism, has immense implications for promoting cultural interactions and political cooperation.

The writer is Senior Fellow (Professor) at Observer Research Foundation, Kolkata Chapter; and Senior Economic Advisor, WWF, New Delhi. Views are personal.

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