- It is a relatively complex value chain and one whose trade tends to be regulated in several ways, making it potentially an interesting example of where and to what extent enhanced integration may promote the development of cross-border value chains.

From a methodological perspective, by focusing on a single commodity we are able to control for product/sector heterogeneity in comparing the dynamics between individual regions across the borders as well as between the regional pairs. For example, it is generally considered that the border between Nepal and India is more open than the border between Bangladesh and India. Therefore, by identifying the differences in how tea is traded in the different border areas (of course, confirming first and specifying the scale and nature of border barriers in each regional pair), we are more likely to be able to link outcomes with border effects.

The case studies are based primarily on field research, complemented with desk-based analysis of secondary data. The _field research_ focused on implementing a detailed survey (with more than 100 discrete questions) designed to capture the structure, trading processes, and challenges facing participants in the tea value chain, covering growers, traders, processors, and other participants in the value chain. In total, some 150 individual interviews were completed (30 in Bangladesh, 61 in India; 59 in Nepal) during the period from April 11 to May 5, 2013. These interviews were complemented by semi-structured interviews with 20-30 stakeholders in each region, including growers, traders, and processors, as well as transporters, customs officials, and other government and industry representatives.

# **3. Profile of targeted districts**

## <u>Location and demography</u>

The _Darjeeling district_ , at the foothills of Mt. Kanchanjanga, the third highest mountain in the world, with a geographical area of 3,149 square km, shares its international boundaries with Nepal, Bhutan and Bangladesh and state boundaries with Sikkim and Bihar. There are four subdivisions of Darjeeling district: Darjeeling, Kalimpong, Kurseong and Siliguri. The district has two different topographic characteristics: the plains (Terai) and the hills, which also correspond to the two different types of tea produced in the region.

_Jhapa and Ilam_ belong to Mechi zone of eastern Nepal, covering an area of 1,606 square km and 1,703 square km, respectively. Jhapa district shares its international boundaries with West Bengal (India) to the east and Bihar to the south, and with Nepal’s Morang district to the west and Ilam district to the North. With administrative headquarters at Chandragadi, the district has three municipalities and 47 Village Development Committees (VDCs), all of them lying in the Terai plains. Ilam district has its boundaries as Panchthar in the North, Morang in the South West, Jhapa in the South and Darjeeling District of India in the East. The district is connected to Charali and the neighboring districts Panchthar and Taplejung in Nepal as well as to Darjeeling via a road from Fikkal through Pashupati Nagar (Government of Nepal, 2011). Ilam covers only mountain terrain lying at 140 meters above sea level. With Ilam bazaar as the district headquarters and only municipality, the district has 48 VDCs.

The entire region is densely populated, yet also highly rural (Table 3). The Indian districts have densities much higher than their national averages with the density in North Dinajpur almost three times as large as the whole of India. The district with the lowest population density (as well as overall population) is Ilam, whose density is in line with that of the Nepalese average. In 2011, Ilam had about 290,000 residents and Jhapa had about 813,000. The combined population of Jhapa and Ilam exceeds 1.1 million, which is more than half that of neighboring Darjeeling. The population is 6