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Trade liberalization in Bangladesh: the process and its impact on macro variables particularly export expansion


  • Mohammad A. Hossain
  • Mohammad Alauddin

    (Univ. of Chittagong and Univ. of Queensland, Australia
    University of Queensland, Australia)


This paper examines the process of Bangladeshís trade liberalization and its impact on the growth and structure of exports, imports, GDP and other relevant macroeconomic variables with particular emphasis on exports. It also provides an updated account of the various structural adjustment programs undertaken in Bangladesh including trade, fiscal, industrial and financial reforms, and explains how these reforms supplemented one another to promote greater market and export orientation. Various Indicators of trade liberalization show a substantial shift of the Bangladesh external trade regime and the resultant reduction in anti-export bias. Spearheaded by textiles and readymade garments, both total- and manufacturing exports consistently grew over the post-liberalization period. Real GDP also registered a steady growth during the post-liberalization period, particularly during the 1990s. An empirical investigation based on a distributed lag modeling and cointegration suggests that both anti-export bias reduction and import-GDP ratio, the latter being a proxy for imported capital, have significantly impacted on exports in the long-term.

Suggested Citation

  • Mohammad A. Hossain & Mohammad Alauddin, 2005. "Trade liberalization in Bangladesh: the process and its impact on macro variables particularly export expansion," Journal of Developing Areas, Tennessee State University, College of Business, vol. 39(1), pages 127-150, September.
  • Handle: RePEc:jda:journl:vol.39:year:2005:issue1:pp:127-150

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    Cited by:

    1. Md. Sadik Pavel & Seikh Ruksana Burhan & Tanim Papiya, 2019. "Should Bangladesh Export to Countries with Better Institutional or Comparatively Similar Institutional Form?," International Economic Journal, Taylor & Francis Journals, vol. 33(1), pages 9-26, January.
    2. Hossain, Mohammad A, 2011. "Trade Liberalisation and Wage Inequality in the Bangladesh Manufacturing Sector, 1973-1994," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 34(3), pages 31-53, September.
    3. MD. Moniruzzaman & Mahmudul Mannan Toy & A. B. M. Rashedul Hassan, 2011. "The Export Supply Model of Bangladesh: An Application of Cointegration and Vector Error Correction Approaches," International Journal of Economics and Financial Issues, Econjournals, vol. 1(4), pages 163-171.
    4. Mohammad Alauddin, 2004. "Recent Developments in the Bangladesh Economy," ASARC Working Papers 2004-13, The Australian National University, Australia South Asia Research Centre.
    5. M. Nusrate Aziz & Nick Horsewood & Somnath Sen, 2014. "The First and Second Stage Pass-through of Exchange Rates: A Developing Country Perspective," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 595-609, August.
    6. Alauddin, Mohammad & Sharma, Bharat R., 2013. "Inter-district rice water productivity differences in Bangladesh: An empirical exploration and implications," Ecological Economics, Elsevier, vol. 93(C), pages 210-218.
    7. Khan, Md. Tareq Ferdous & Kundu, Nobinkhor, 2012. "Future Contribution of Export and Import to GDP in Bangladesh: A Box-Jenkins Approach," MPRA Paper 65153, University Library of Munich, Germany, revised 15 Jun 2012.
    8. Abu Saleh, Md. & Yunus Ali, M. & Julian, Craig C., 2014. "International buyer behaviour–commitment relationship: An investigation of the empirical link in importing," International Business Review, Elsevier, vol. 23(2), pages 329-342.
    9. Durevall, Dick & Munshi, Farzana, 2006. "Trade Liberalization and Wage Inequality: Empirical Evidence from Bangladesh," Working Papers in Economics 205, University of Gothenburg, Department of Economics.

    More about this item


    Anti-Export Bias; Export Diversification; Market Diversification; Real Effective Exchange Rates; Structural Change; Trade Liberalization;

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General


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