The trade relations between Bangladesh and 4 of its South Asian partners is modeled within a larger macroeconomic model. The macroeconomic model, including the trade functions is estimated econometrically using a single-equation simultaneous method. The results of econometric estimates are very encouraging with exceptionally good fits in most cases. The model also includes an aggregative supply side manifested in a value-added production function reflecting labour surplus in the economy. This makes the model non-Keynesian. It also specifics a non-neoclassical capital accumulation process in the economy. The model is simulated to analyze the macroeconomic effects on the Bangladesh economy, of trade expansion (increase in both exports and imports) with India, Pakistan, Nepal and Sri Lanka. The model permits the effect of imported intermediates from South Asian countries on output to be captured. This is perhaps, the most important contribution of the model. The simulation results show positive gains from increased trade. However, the instruments and institutions required to boost intra-South Asian trade are still weak and have not been addressed in this paper.

We conduct in this study a comparative assessment of the developmental gains registered by 85 Less Developed and 19 More Developed countries (LDCs and MDCs) over the 1965-85 time period. The gains are assessed in terms of the “paired differences” statistical method applied to a number of indicators. The estimates suggest that all countries made significant gains on virtually all indicators. Yet, the gains were unevenly divided among country groups, divided on the basis of per capita income, geographical location and population size. To obtain a broad gauge of the prevailling developmental gap, we computed the number of years that would clapse before a given indicator for a given group would reach this indicator’s value registered by the group of MDCs.