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Should Bangladesh join Regional Comprehensive Economic Partnership (RCEP)? The gravity explanation of Bangladesh dilemma

Gour Gobinda Goswami (Department of Economics, North South University, Dhaka, Bangladesh)
Farhan Khan (Department of Economics, North South University, Dhaka, Bangladesh)
Kazi Labiba (Department of Economics, North South University, Dhaka, Bangladesh)
Farhanaj Achol (Department of Economics, North South University, Dhaka, Bangladesh)
Tapas Kumar Saha (Department of Economics, North South University, Dhaka, Bangladesh)
Aunanna Zulfikar (Department of Economics, North South University, Dhaka, Bangladesh)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 1 July 2022

Issue publication date: 16 January 2024

256

Abstract

Purpose

The scope of this work is to explore whether Regional Comprehensive Economic Partnership (RCEP) would be beneficial to Bangladesh, given Bangladesh's strong ties with India and the west.

Design/methodology/approach

Using extended gravity equation and data from Head and Mayer (2021) and the Direction of Trade Statistic (IMF, 2021) for Bangladesh with its applicable partner countries from 1972 till 2019, the authors attempted to examine the potential impact of joining RCEP while keeping its relationship with South Asian Association for Regional Cooperation (SAARC), and other existing economic integration schemes intact.

Findings

Using traditional pooled ordinary least squares, two-stage least square and generalized method of moment techniques, it has been revealed that conventional partners in the South led by India are still beneficial to Bangladeshs trading line. Joining RCEP provides ample avenues for trade expansion without replacing the positive effects of SAARC.

Practical implications

Traditional partners from European, American and South Asian trading opportunities are still paying enough dividends to Bangladesh. RCEP is providing a trade-enhancing chance for Bangladesh in the eastern direction. This paper provides a policy suggestion to look east policy of government. A total overhaul of her tax structure through minimizing excessive reliance on import tariff revenue is desired to facilitate her to join RCEP in the future because most of its prospective RCEP partners are import partners.

Originality/value

This is the first and the only study which explores the feasibility of Bangladesh to join the RCEP by using the most recently updated gravity data in a panel framework.

Highlights

  1. Since its inception on November 15, 2020, Regional Comprehensive Economic Partnership (RCEP) has emerged as one of the largest economic integration areas in the world.

  2. As a borderline country between South Asia and RCEP, Bangladesh is in a fix to take a decision either to join or not to join RCEP if they are invited.

  3. This paper used the gravity equation in an extended form by taking Bangladesh with its 197 trading partners’ trade data for 1972–2019.

  4. The findings postulate that the existing relationship with SAARC countries is still beneficial to its welfare, and RCEP is also economically helpful in enhancing its trade.

Keywords

Acknowledgements

Data Availability Statement: The data file and the STATA do-file containing programs are available from the corresponding author upon request.

Funding: This paper is partly funded by North South University.

Citation

Goswami, G.G., Khan, F., Labiba, K., Achol, F., Saha, T.K. and Zulfikar, A. (2024), "Should Bangladesh join Regional Comprehensive Economic Partnership (RCEP)? The gravity explanation of Bangladesh dilemma", International Journal of Emerging Markets, Vol. 19 No. 1, pp. 249-269. https://doi.org/10.1108/IJOEM-03-2022-0442

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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