Bilateral Trade Balance of Bangladesh with BRICS Countries: A Static Panel Data Analysis

Abstract

This paper explores the phenomenon of gravity modeling to examine the crucial relationships between the trade balances of Bangladesh with BRICS countries. Specifially, the relative factors determining trade in the popular gravity model have effcts on the trade balance model. The trade balance depends on the relative GDP, relative per capita GNI, real exchange rate and importweighted distance proxies for transportation cost of the partner countries to the home country. Using standard panel data techniques during the 1991-2013 period, the model is empirically tested and the results show signifiant effcts of all the relative factors on the bilateral trade balance of Bangladesh in trading with BRICS countries. The robustness check of the model ensures the validity of the specifiation. The static panel data analysis explores the cross-country variations as well as the time-invariant country-specifi effcts on trade balance with heterogeneous economies and fids signifiant effcts of all relative factors on the trade balance of Bangladesh.