Abstract
In this research endeavor, we have tried to assess the dynamic relationships between Bangladesh's trade balances with the Trans-Pacific Partnership (TPP) countries as well as whether Bangladesh could be benefitted if it has shown its intention to integrate with the TPP agreement. Hence, the tariff rate exporter per product is used as a proxy for economic integration variable along with conventional trade balance model. From the time span of 2005 to 2020, the simulated trade model tested for Bangladesh's merchandise trade with its TPP trading partner countries (with or without the USA). A dynamic balanced panel data analysis has used to capture the Unrestricted Error Correction Mechanism (UECM) and Generalized Method of Moments (GMM) estimator. The model has tested under two different scenarios (with or without integration), and a robustness check of the model has confirmed the validation of the specification. The study has shown that cointegration exists; stable long-run relationships from any short-run deviation and short-run dynamics has also shown convergence. Therefore, empirical results have indicated that, without integrating both scenarios the value of coefficient of proxy for economic integration variable in both cases is 0.21 and statistically significant as well as Bangladesh's trade balance is relatively better off without integration than integration with the TPP agreement. Thus, this study has suggested that Bangladesh should be maintained bilateral trade relationship instead of not joining the TPP mega-regional FTA (i.e., TPP without the USA).
Should Bangladesh be Integrated with Trans-Pacific Partnership? A Dynamic Panel Data Analysis