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GTAP Resource #1245

"Multilateral and Regional Trade Agreements: Options for Bangladesh"
by Lips, Markus, Andrzej Tabeau and Frank van Tongeren

In this paper we analyze the impact of several multilateral trade agreements on Bangladesh. Around 80 percent of Bangladesh’s exports are textile or readymade garments, which are bounded by export quotas. We assume that production capacity is not entirely used. Therefore, it seems to be likely that global economies of scale play a major role when trade liberalization will take place.

Using the GTAP model (Hertel and Tsigas, 1997) we follow Francois (1998) to introducing economies of scale of the wearing apparel sector into the GTAP model. The approach is based on the cost disadvantage ratio (CDR) and handles economies of scale as a kind of technical progress. Since exact estimations of the CDR are not available we apply the Systematic Sensitivity Analysis by Arndt and Pearson (1998) to employ value range for the CDR.

In a first scenario we analyze the impact of the Agreement on Textiles and Clothing (ATC) and the WTO accession of China. In further scenarios we study the South Asian Free Trade Agreement (SAFTA), a potential outcome of the Doha Round of the WTO, and a bilateral agreement with the European Union. For the calculation we use the GTAP 5 data base, which includes Bangladesh as a single region.
Based on model results we draw conclusions for the Bangladeshi economy concerning effect of multilateral, regional and bilateral trade liberalization.

Arndt, C., and Pearson, K. R. (1998). How to Carry out Systematic Sensitivity Analysis via Gaussian Quadrature and GEMPACK, GTAP Technical Paper No. 3.

Francois, J. F. (1998). Scale Economies and imperfect competition in the, GTAP Technical Paper No. 14.

Hertel, T. W., and Tsigas, M. E. (1997). Structure of GTAP, in Hertel, T. W. (ed.), Global Trade Analysis Modeling and Applications, Cambridge University Press, New York, 13-73.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2003 Conference Paper
Status: Published
By/In: Presented at the 6th Annual Conference on Global Economic Analysis, The Hague, The Netherlands
Date: 2003
Created: Lips, M. (4/29/2003)
Updated: Bacou, M. (9/27/2003)
Visits: 4,118
No keywords have been specified.

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