Determinants of Exports: A Gravity Model Analysis of the Bangladeshi Textile and Clothing Industries

Abstract

The purpose of this study is to find out the determinants and issues influencing Bangladeshi textile and clothing (T&C) exports. A unique data set has been generated and used to estimate the panel gravity model of Bangladeshi T&C export flows to a total of its 40 trade partners over a period of 27 years, spanning from 1990 to 2017. The results show that the gross domestic product (GDP), real exchange rate and per capita GDP of the importers have appeared to be major determinants of Bangladesh’s textile exports trade. Also, Bangladesh and World Trade Organization membership have a strong positive significant impact on T&C exports. The geographical distance has no strong significant effect on textile trading. It is found that European Union and North American Free Trade Agreement countries are the two important export destinations for the garments of Bangladesh. This study is a novel and significant contribution for a couple of reasons: First, Bangladesh’s major trading partners are covered in this study sample. Second, the article’s focus on the gravity panel data analysis fills up a major research gap on the determinants of exports of the Bangladeshi garments. This study will thus pave the new avenues for further research in future.