Assessing the Existence of Gravity Model for Bangladesh’s Trade: A Panel Data Analysis

Authors

  • MD. Kamrul Hasan Maruf Assistant Commissioner and Executive Magistrate at Government of the People’s Republic of Bangladesh
  • Subrata Saha Assistant Professor, Department of Economics, Mawlana Bhashani Science and Technology University, Bangladesh
  • Md. Rakibul Hasan Baten Student of the Department of Economics, Mawlana Bhashani Science and Technology University, Bangladesh.
  • Dilruba Akter Student of the Department of Economics, Mawlana Bhashani Science and Technology University, Bangladesh.

DOI:

https://doi.org/10.48165/sajssh.2020.1306

Keywords:

Bilateral trade, Gravity Model, Pooled OLS, Random Effects, Fixed Effects, Hausman test

Abstract

Generally, Gravity model has an important dominance in bilateral trade performance. The  foremost intention of this paper is to justify the theory of Gravity model on Bangladesh’s trade  activities with its sixty major bilateral trading partner countries including all members of  NAFTA and SAARC by applying panel data estimation approach for data 2001 to 2015. This  deed estimates the relationship between the total trade (sum of export and import) of Bangladesh  with its trade partner and their size of the economies and the transportation cost of trade as proxy  of distance between the trading countries. The findings of the study conclude that the shape of  the trading countries’ economies has positive significant impact on their bilateral trade and cost  of transport is examined a meaningful factor that it has negative impact on Bangladesh’s trade.  The study comes across with the visualization that gravity theory has persistency with the trade  of Bangladesh. In Bangladesh, the country specific effect indicates it is better for Bangladesh to  trade with its neighboring countries rather than trading with less distance countries as the dummy  coefficient of SAARC member countries is more positive significant than NAFTA member long  distance countries.  

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Published

2020-12-05

Issue

Vol. 1 No. 3 (2020): South Asian Journal of Social Sciences and Humanities (Dec) 2020

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Articles

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How to Cite

Maruf, M.K.H., Saha, S., Baten, M.R.H., & Akter , D. (2020). Assessing the Existence of Gravity Model for Bangladesh’s Trade: A Panel Data Analysis . South Asian Journal of Social Sciences and Humanities, 1(3), 71–92. https://doi.org/10.48165/sajssh.2020.1306
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