A Panel Data Analysis of Bangladesh's Textile and Clothing Export: The Gravity Model Approach

Abstract

The Purpose of this thesis paper is to determine the factors that influence the export of Bangladesh’s textile and clothing with 10 major trade partners. To analyze and conduct the research a panel data set has been generated to estimate the panel gravity model of Bangladesh’s textile and clothing export to a total of 10 major trade partners over a period of 16 years from 2000 to 2015. There are few tests have been done including regression analysis, Fixed effect model, Random effect model and Hausman test to select between Fixed effect model and Random effect model. The dependent variable of this study is Export of textile and clothing and the independent variables are GDP of Bangladesh, GDP of Partners country, Geographical distance, CPI( Consumer Price Index), landendownment(Total land area of Bangladesh and Partner country), Tariff rate of Bangladesh and Tariff rate of Partner country. The study shows that the Geographical distance does not have any negative impact on the export of T&C( Textile and Clothing) but the P value is very significant. The land area and CPI have negative coefficient and P value is very significant. One the other hand, Tariff of Bangladesh and Tariff of partner country have positive coefficient but the P value is not that significant. The research study is a remarkable contributor for the export of T&C industries in Bangladesh. And this research will help find more insights and pave a new way for further research in the future.