JBS Vol 04. Num 2. 2002 - DETERMINANTS OF AGGREGATE IMPORT DEMAND IN BANGLADESH

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.