Bangladesh's Trade with Asia: What Do Gravity Models Tell Us?
Author: SULTAN HAFEEZ RAHMAN AND MD. WAHID FERDOUS IBON
External trade has played a crucial role in Bangladesh’s strong economic growth and structural transformation, in the backdrop of rising prosperity in Asia as a whole. This paper examines the effect of national incomes and trade costs of three key Asian sub-regions—which “powered” the overall growth and prosperity in Asia as a whole—on Bangladesh’s external trade. The paper used the gravity model of international trade to test its validity in explaining Bangladesh’s trade with the sub-regions. Alternative empirical specifications of the model were econometrically estimated. The parameter estimates indicate that the central hypothesis of the gravity model is valid, i.e., trade between any two countries is directly proportional to their national incomes and inversely proportional to their trade costs. In line with these predictions, Bangladesh’s trade with the three key Asian sub-regions were found to be positively related to their GDPs and inversely related to trade costs. The predictive power of the estimated gravity models is also high. The statistical tests relevant to the econometric estimation of the specified model and the data used were conducted to ensure that the parameter estimates were robust. The model thus provides a solid basis for forecasting medium-term trade growth with the key Asian sub-regions, and hence it has a value to Bangladesh’s planners and policymakers. The results also imply that Bangladesh should pay greater attention to reviving trade (and industry) reforms to benefit from growing prosperity in its continental neighbourhood.
Total Factor Productivity in Bangladesh: An Analysis Using Data from 1981 to 2014
Author: MARUF AHMED AND TAHREEN TAHRIMA CHOWDHURY
This paper examines the total factor productivity (TFP) growth rate in Bangladesh during 1981-2014, carrying out the growth accounting exercise, and exploring the determinants of TFP growth in Bangladesh. We found that the capital share, obtained from the estimation of the neoclassical Cobb-Douglas production function, varies from half to two-thirds based on the different methods and assumptions used. The growth of factor accumulation still drives the growth of Bangladesh as the share of TFP has been found negative in most of the specifications. Government expenditure on education and instituions, particularly voice and accountability, turn out to be robust and significant in explaining positive TFP growth. On the contrary, increased regulatory control, broad money, inflation, and globalisation are found to impact TFP negatively. Therefore, this paper entails policy suggestions of investment in human capital, ensuring good governance and reforming public administration to enhance the TFP growth in Bangladesh
Parental Education and Schooling Choice: An Empirical Study from Bangladesh
Author: RUBAIYA MURSHED AND MOHAMMAD RIAZ UDDIN
This paper explores the schooling choice decision of parents in Bangladesh and concludes that the parental level of education, in particular father’s education level, negatively influences the likelihood of sending the child to the religious stream of education. The paper suggests that parents’ access to information and their education level might be related- allowing them to make informed schooling choice for their children.
Post-Initial Public Offering Performance Drift: Evidence from Bangladesh
Author: MD. SHAFIQUL ISLAM and SHIHABUL ANWAR
This paper examines if there is any post-IPO performance drift in the stock market of Bangladesh using five different performance indicators. We use 300 firm-year observations of 50 IPO firms from the period of 2009 to 2014, compiled from the annual reports and prospectuses of these firms. The results show that there is a statistically significant decline in performance measured by operating ROA after going public. The results may indicate the 'window dressing' of the accounting numbers in the pre-IPO period.