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Trade liberalization and industry performance in Bangladesh

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  • Hassan, M. Kabir
  • Isik, Ihsan
  • Mamun, Abdullah

Abstract

This paper analyzes trade liberalization's impact on Bangladesh's manufacturing sector performance. Using firm level input and output data and employing a nonparametric data envelopment analysis (DEA), we calculate technical, pure technical and allocative efficiencies for a sample of 82 firms collected over two periods of time: 1993 and 1998. Then, applying a Malmquist index method, we calculate indices of total factor productivity change and decompose them into technological change, technical efficiency change and scale efficiency change. Our results show that the majority of Bangladeshi manufacturing firms experienced a positive total factor productivity growth between 1993 and 1998, averaging 29% over a five-year period. Export-oriented firms have performed better than import-oriented firms in improving their technical efficiency relative to the best-practice firms in their own sub-group. When these results are compared with the official statistics on the output performance of manufacturing firms, we can conclude that trade liberalization in the 1990s did not adversely affect the Bangladeshi manufacturing industry.

Suggested Citation

  • Hassan, M. Kabir & Isik, Ihsan & Mamun, Abdullah, 2010. "Trade liberalization and industry performance in Bangladesh," Journal of Policy Modeling, Elsevier, vol. 32(3), pages 399-417, May.
    • Handle: RePEc:eee:jpolmo:v:32:y::i:3:p:399-417
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    Cited by:

    1. Ihsan Isik & Ihsan Kulali & Busra Agcayazi-Yilmaz, 2016. "Total Factor Productivity Change in the Middle East Banking:The Case of Jordanian Banks at the Turn of the Millennium," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 5(3), pages 01-29, April.
    2. Sahoo, Bimal Kishore & Nauriyal, D.K., 2014. "Trends in and determinants of technical efficiency of software companies in India," Journal of Policy Modeling, Elsevier, vol. 36(3), pages 539-561.
    3. Hudson, John & Orviska, Marta, 2013. "Firms’ adoption of international standards: One size fits all?," Journal of Policy Modeling, Elsevier, vol. 35(2), pages 289-306.
    4. Dimitrios Giokas & Nicolaos Eriotis & Ioannis Dokas, 2015. "Efficiency and productivity of the food and beverage listed firms in the pre-recession and recessionary periods in Greece," Applied Economics, Taylor & Francis Journals, vol. 47(19), pages 1927-1941, April.

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