Determining the Export Value: A Panel analysis of the Gravity Model Research on Bangladesh: Cloth and Textile Sector

Abstract

The goal of this thesis is to determine the factors that influence Bangladeshi cloth and textile exports. Over a 15-year period, from 2000 to 2015, a comprehensive data set was created and used to evaluate the panel gravity model of Bangladeshi cloth and textile export streams to a total of 7 (SAARC nation) trade partners. In the first stage OLS estimation method is applying in the panel data. Then in the next steps, Random effect model is tested for the data set. In the third steps we employed the Fixed effect model. Then we estimate the Hausman test to choose the model between fixed and random. By utilizing the Hausman Test, REM is better than the FEM. Data selected for the thesis is strongly balanced data. The variable of per capita GDP is statistically significant. Also, distance between the exporting country and SAARC countries. According to the REM result, closer the distance from the exporting nation, higher the trade occurs between Bangladesh and SAARC nations. Empirically, a 1% increase the distance will lead to decrease the trade value of cloth and textile by 1.05%. The variable of per capita GDP of SAARC nation also increases the trade value of cloth and textile in Bangladesh. Carbon emission has no statistically significant effect.