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The Determinants of Bangladesh's Trade: Evidence from the Generalized Gravity Model

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  • Rahman, Mohammad Mafizur
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    Abstract

    The application of the generalized gravity model in analyzing the Bangladesh's trade reveals that Bangladesh's trade is positively determined by the size of the economies, per capita GNP differential of the countries involved and openness of the trading countries. Bangladesh's exports are positively determined by the exchange rate, partner countries' total import demand and openness of the Bangladesh economy. Bangladesh's imports are determined by inflation rates, per capita income differentials, openness of the countries involved in trade and the border between India and Bangladesh. Multilateral resistance factors and transportation costs affect Bangladesh's trade positively and negatively respectively.

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    File URL: http://hdl.handle.net/2123/7634
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    Bibliographic Info

    Paper provided by University of Sydney, School of Economics in its series Working Papers with number 3.

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    Date of creation: Feb 2005
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    Handle: RePEc:syd:wpaper:2123/7634

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    Postal: Sydney, NSW 2006
    Phone: 61 +2 9351 5055
    Fax: 61 +2 9351 4341
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    Web page: http://sydney.edu.au/arts/economics
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    Keywords: Fixed Effect Model; Bangladesh's Trade; Gravity Model; Panel Data;

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    1. Edward Christie, 2002. "Potential Trade in Southeast Europe: a Gravity Model Approach," wiiw Working Papers 21, The Vienna Institute for International Economic Studies, wiiw.
    2. Simon J. Evenett & Wolfgang Keller, 1996. "On Theories Explaining the Success of the Gravity Equation," International Trade 9608001, EconWPA, revised 13 Jun 1997.
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    4. James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
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    7. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72.
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    13. Subhash Sharma & Soo Chua, 2000. "ASEAN: economic integration and intra-regional trade," Applied Economics Letters, Taylor & Francis Journals, vol. 7(3), pages 165-169.
    14. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
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    16. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
    17. Hassan, M. Kabir, 2001. "Is SAARC a viable economic block? evidence from gravity model," Journal of Asian Economics, Elsevier, vol. 12(2), pages 263-290.
    18. Won W. Koo & David Karemera, 1991. "Determinants of World Wheat Trade Flows and Policy Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 39(3), pages 439-455, November.
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    Cited by:
    1. Cardamone, Paola, 2007. "A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements using Gravity Models," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 60(4), pages 421-473.

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