Bilateral Import Demand Elasticities the Case of Bangladesh

Abstract

Numerous scholars have estimated the elasticities of the import demand function in many different countries using different data sets and different economic techniques. As yet no definitive conclusions can be drawn from this empirical literature despite the importance of import demand elasticities for trade policy in developing countries. This paper seeks to contribute to the empirical literature on import demand elasticities in developing countries by considering the case of Bangladesh. In contrast to this earlier work on import demand elasticities in Bangladesh, which all used aggregate data, this paper examines the likely impacts of trade liberalization policies on the disaggregated import function in Bangladesh for the period 1973 to 2004. Our main objective is to establish whether bilateral import elasticities are significantly different between major trading partners. A secondary objective is to determine whether bilateral import elasticities are significantly different between major trading partners. A secondary objective is to determine whether trade liberalization has had any impact on the import sector in Bangladesh.