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Economic Growth

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Journal of Business, Economics & Finance (2012), Vol.1 (2)

Manni and Ibne Afzal, 2012

EFFECT OF TRADE LIBERALIZATION ON ECONOMIC GROWTH OF DEVELOPING COUNTRIES: A CASE OF BANGLADESH ECONOMY Umme Humayara Manni1, Munshi Naser Ibne Afzal1
1

Universiti Brunei Darussalam, Faculty of Business, Economics and Policy Studies, Brunei.
ABSTRACT The objective of this paper is to assess the impact of trade liberalization on Bangladesh economy between the periods 1980 to 2010. This research analyzes the achievements of the economy in terms of important variables such as growth, inflation, export and import after trade liberalization. The paper uses simple Ordinary Least Square (OLS) technique as methodology for empirical findings. The analysis clearly indicates that GDP growth increased consequent to liberalization. Trade liberalization does not seem to have affected inflation in the economy. The quantitative analysis also suggests that greater openness has had a favourable effect on economic development. Both real export and imports have increased with greater openness. Liberalization policy certainly improves export of the country which eventually leads higher economic growth after 1990s. The findings of this study can be an interesting example for trade liberalization policy study in developing countries.

KEYWORDS Trade liberalization, economic growth, developing countries, Bangladesh economy, OLS technique, openness, export, import, inflation

1. INTRODUCTION Like many developing countries, the primary focus of policies in Bangladesh is to obtain high and sustainable growth. However, to achieve and maintain a higher growth rate, policy makers need to understand the determinants of growth as well as how policies affect growth. Trade liberalization policy in 1990 opened up the opportunity for the Bangladesh economy to enhance economic growth and foster overall...

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