The causative factors of Bangladesh's exports: evidence from the Gravity Model Analysis

Abstract

The paper firstly notes a theoretical justification for using the gravity model in the analysis of bilateral trade under either perfectly competitive or monopolistic market structure. It then applies a generalized gravity model to analyze Bangladesh’s export trade pattern using the panel data estimation technique. The estimated results reveal that the main contributors of the Bangladesh’s exports are the exchange rate, partner countries’ total import demand, openness of Bangladesh economy and multilateral resistance factors. All affects the country’s exports positively. Transportation costs affect Bangladesh’s exports negatively. The country specific effects show that neighbouring countries’ influence on Bangladesh’s exports is more than the influence of other distant countries.