BUKU ABSTRAK - Universiti Putra Malaysia

Impacts of Trade Liberalisation on Aggregate Import in Bangladesh: An ARDL
Bounds Test Approach
Assoc. Prof. Dr. Zulkornain Yusop
Faculty of Economics and Management, University Putra Malaysia,
43400 UPM Serdang, Selangor, Malaysia.
+603-8946 7631; zulkornain.yusop@gmail.com
AFTA and the Intra-trade Patterns among ASEAN-5 Economies: Trade-enhancing
or Trade-inhibiting
Assoc. Prof. Dr. Zulkornain Yusop
Faculty of Economics and Management, University Putra Malaysia,
43400 UPM Serdang, Selangor, Malaysia.
+603-8946 7631; zulkornain.yusop@gmail.com
127
Social Sciences
Bangladesh has been liberalising its trade regime extensively since 1992 in order to achieve higher trade
performance and GDP growth. However, despite the long period of liberalisation, imports are still growing faster
than exports, increasing the trade deficit. Trade liberalisation is considered a crucial contributory factor. The
paper examines the impact of trade liberalisation on the aggregate import in Bangladesh, using the ARDL Bounds
Test approach with annual time series data from 1972-1973 to 2004-2005. Empirical results suggest that trade
liberalisation through reduction of the import duty rate increases the aggregate import substantially in the short
run, but insignificantly in the long run. Trade liberalisation using simplification of non-tariff measures shows a
significant but low positive impact on the aggregate import in the long run. Liberalization interaction with price
decreases imports slightly hence improves the trade balance, while interaction with income increases imports
slightly hence worsens the trade balance. An increase in imports is mainly stimulated by an increase in income.
Moreover, higher income elasticity compared to price elasticity indicates that an effort to maintain imports at the
desired level by increasing import duty could be counter balanced and ineffective. Therefore, a consistent policy
to promote not only consumption of domestically produced products, but investment, production, and backward
linkage industries is essential in order to improve the trade balance and GDP growth in Bangladesh.
Keywords: Trade liberalisation, aggregate import, ARDL bounds test, short run and long run impacts, interaction impacts
This paper examines ASEAN economic integration and its ability to promote intra-ASEAN trade, namely,
Indonesia, Malaysia, Philippines, Singapore and Thailand. In order to achieve this goal, a modified gravity model
is estimated within autoregressive distributed lag (ARDL) framework, or bounds testing approach for each of the
five ASEAN countries based on data from year 1970 to year 2001. The empirical results indicate that the effects
of the size of economy on bilateral trade flow in ASEAN are either trade-enhancing or trade-inhibiting dependent
on the country-specific. There is evidence that AFTA preferential arrangements are important and prevalent in
enhancing intra-ASEAN trade. However, ASEAN countries may not as a whole benefit from the formation of
AFTA as the trade deflection might occur in the regional market.
Keywords: Free trade area, trade creation, trade diversion, trade deflection, trade-enhancing, preferential trade arrangement