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Determinants of Aggregate Import Demand in Bangladesh

in Journal of Bangladesh Studies
Autor:in:
Tuck Cheong Tang School of Business & Information Technology Monash University Malaysia 2 JalanKolej Bandar Sunway 46150 Pentaling Jaya Selangor Darul Ehsan Malaysia

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This paper aims to examine the determinants of aggregate import demand behaviour in Bangladesh. In contrast with traditional import demand specification, the final demand variable (Real Gross Domestic Product) was further disaggregated into private consumption, government consumption, expenditure on export goods, and gross domestic investment. The other determinant is relative price. The bounds testing approach and unrestricted error correction model were employed for analysis. The findings are first, a long run relationship exists among quantity of import demand and its determinants over sample period 1965 to 1998. Secondly, Bangladesh’s import demand is influenced differently by various components of final expenditure, particularly expenditure on export goods. The results have important policy implication to improve external balance.

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