IDEAS home Printed from https://ideas.repec.org/a/ris/badest/0454.html
   My bibliography  Save this article

The Small Country Assumption, Econometric Estimates and Policy Making: A Reassessment with Bangladesh's RMG Exports to the European Union

Author

Listed:
  • Razzaque, Abdur

    (Assistant Professor, Department of Economics, University of Dhaka, Bangladesh)

Abstract

Most empirical studies on Bangladesh have found the price elasticity of demand for the country’s exports to be quite small – considerably lower than one (absolutely). These econometric estimates have a serious implicit implication in terms of challenging the policy of export promotion since in the presence of such highly price inelastic demand the optimal trade policy option will be to impose taxes on exports rather than to provide incentives. It is also difficult to perceive why the country should have such a strong market power, as reflected in the low price elasticity estimates, when close substitutes for its export items are widely available in international markets. By empirically estimating a theoretical model, this paper demonstrates that the demand elasticity for exports of RMG to the European Union (EU) is much higher than the conventional estimates. This evidence suggests that Bangladesh may be considered as a “small” country, which is compatible with the policy of export promotion and trade liberalization.

Suggested Citation

  • Razzaque, Abdur, 2004. "The Small Country Assumption, Econometric Estimates and Policy Making: A Reassessment with Bangladesh's RMG Exports to the European Union," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 30(1-2), pages 1-34, March-Jun.
    • Handle: RePEc:ris:badest:0454
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    Policy Making; Bangladeshs RMG Exports; European Union;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:badest:0454. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Meftaur Rahman, Cheif Publication Officer, BIDS (email available below). General contact details of provider: https://edirc.repec.org/data/bidssbd.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.