Should Bangladesh Export to Countries with Better Institutional or Comparatively Similar Institutional Form?

ABSTRACT

Using panel data for the years 2006–2015, this study empirically investigates the effect of rule of law as an institution on Bangladesh's exports to 28 European Union countries (EU28) based on gravity model analysis. Two-step econometric results suggest that institutional rule of law is strongly associated with Bangladesh's exports, and institutional quality provides evidence of this significant effect. Furthermore, exports of Bangladesh are driven by economic size, market size, and the real exchange rate as well as rule of law. These results are suggestive of an important joint role for both trade and institutions in the long run.

KEYWORDS:

• Bangladesh
• gravity model
• institution
• panel data
• rule of law

JEL CODES:

• F13
• M21

Acknowledgements

MSP coordinated to the design and idea of the study, data collection, analysis and interpretation of data, and wrote the manuscript draft. SRB contributed to the development of the concept, analysis and manuscript revision. TP contributed to manuscript construction, data collection, data entry, revision, editing, and structure. All authors have approved the final manuscript.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Md. Sadik Pavel http://orcid.org/0000-0002-1116-9069

Seikh Ruksana Burhan http://orcid.org/0000-0003-0956-0971

Tanim Papiya http://orcid.org/0000-0002-4063-5727

Notes

1 The Association of Southeast Asian Nations (ASEAN) is an organization of countries in Southeast Asia officially formed in 1967 to promote cultural, economic, and political development in the region.

Additional information

Notes on contributors

Md. Sadik Pavel

Md. Sadik Pavel successfully completed the Bachelor and Master Degrees in Economics from Shahjalal University of Science and Technology, Bangladesh, and then completed another the Master degree in Development Economics and International Project Management from the University of Paris-Est Creteil, France. Sadik Pavel worked in Economic Research Group (ERG), Dhaka, Bangladesh as a Research Associate and is now working as an independent economic researcher.

Seikh Ruksana Burhan

Seikh Ruksana Burhan successfully completed the Bachelor and Master Degrees in Economics from Shahjalal University of Science and Technology, Bangladesh, and now is a Graduate Student of the University of Victoria Canada. Seikh Ruksana Burhan is working (study leave) as a Research Associate in Bangladesh Foreign Trade Institute (BFTI).

Tanim Papiya

Tanim Papiya successfully completed the Bachelor and Master Degrees in Economics from Shahjalal University of Science and Technology, Bangladesh. Tanim Papiya is now working as Monitoring, Evaluation/Knowledge Management Officer in Friends in Village Development Bangladesh (FIVDB), Sylhet, Bangladesh.