South Asian Journal of Social Sciences and Humanities
Year: 2020 (Dec), Volume: 1, Issue. (3)
First page: (71) Last page: (92)
Online ISSN: 2582-7065
Assessing the Existence of Gravity Model for Bangladesh’s Trade: A Panel Data Analysis
Kamrul Hasan Maruf1, Subrata Saha2 , Rakibul Hasan Baten3 and Dilruba Akter4
1Assistant Commissioner and Executive Magistrate at Government of the People’s Republic of Bangladesh
2Assistant Professor, 3,4Student, Department of Economics, Mawlana Bhashani Science and Technology University, Bangladesh
Corresponding Author: Subrata Saha, E-mail: firstname.lastname@example.org
Online Published on 02-December-2020
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.
Bilateral trade, Gravity Model, Pooled OLS, Random Effects, Fixed Effects, Hausman test.
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