EMPIRICAL ANALYSIS OF FOREIGN TRADE COMPOSITION,PERFORM-ANCE AND TREND OF BANGLADESH

2013EMPIRICAL ANALYSIS OF FOREIGN TRADE COMPOSITION,PERFORM-ANCE AND TREND OF BANGLADESH SUBMISSION DATE: 22 JULY, 2013

MD. SAJIB HOSSAINLecturerDepartment of FinanceUniversity of Dhaka

GROUP : 01SL NONAMEID NOREMARKS

01MD. RUBEL HOSSAIN17-019

02Md. jABED CHOWDHURY17-051

03md.abdus salam sheikh17-067

04MD. DELOAR HOSSAIN17-123

05 MD. ARAFAT HOSSAIN17-159

BBA 17th BatchSection-ADepartment of FinanceUniversity of Dhaka.

Date of Submission: 22 July, 2013

Letter of Transmittal

July 22, 2013MD. Sajib HossainLecturerDepartment of FinanceUniversity of DhakaSubject: Letter regarding Submission of report on Empirical Analysis of Foreign Trade Composition, Performance and trend of Bangladesh.Dear Sir,With humble respect we would like to convey your knowledge that we have prepared a report on Empirical Analysis of Foreign Trade Composition, Performance and trend of Bangladesh under your kind supervision. We have tried our best to prepare the report in consistence with the optimal standard under your valuable direction.We would be very grateful if you kindly accept this report. We tried heart and soul to make this report as a complete one. It would be pleasure for us if this report can serve its purpose.Respectfully MD Rubel HossainRoll: 17-019, Section: AOn behalf of Group no. 01BBA (17th Batch)Department of FinanceUniversity of Dhaka

Executive summary

This report mainly covers empirical analysis of foreign trade composition, performance, and trend of Bangladesh. The amount of import and export are increased gradually. Bangladesh has trade deficit because the amount of import exceeds the export (IMPORT-EXPORT). Major exported goods of Bangladesh are Readymade garments, Frozen food, Jute goods, Leather, Chemical products, Engineering products etc. The major imported goods of Bangladesh are Textile and articles, Wheat, POL, Edible oil, Crude Petroleum, Chemical ,Cement etc. The major exported countries of Bangladesh are USA, Germany, UK, Italy, France, India etc. and the major imported countries are Japan, Singapore, Hong Kong, India, USA, China, Korea etc. This report Covers some findings such as , a brief concept about composition of export, import and trade balance of Bangladesh, a brief concept about the performance of Bangladesh in the area oexport and import.a knowledge about top 5 imported and exported goods of Bangladesh, the country from which Bangladesh import, the country to which Bangladesh export and Finally a brief concept of foreign direct investment of Bangladesh.This report also covers some recommendations such as:Bangladesh should increase the amount of export,Bangladesh also should reduce amount of import,Bangladesh also should increase Foreign direct investment to take advantage of international diversification,It also should export in developed countries,It should try to maintain balance of payments,It should increase domestic production so that it can able to export more goods and reduce the amount of imports.we find that the amount of import and export are gradually increased. The overall composition of import, export and trade balance of Bangladesh are not favorable. The foreign direct of investment of Bangladesh are increased year by year. The amount of import exceeds the amount of export that create trade deficit. Finally we can say that the performance of Bangladesh is good in the area of export but not better in the area of import. So Bangladesh should increase the amount of export and decrease the amount of import.

TABLE OF CONTENT

Sl. No.TopicPage No.

Chapter-01Introduction06

1.1Acknowledgement07

1.2Origin of the report 07

1.3Objective of the report 07

1.4 Methodology 08

1.5 Scope of the report 08

1.6Limitation of the report 08

1.7Theoretical overview09

Chapter 02EMPIRCAL ANALYSIS 10

2.1Year wise Export11

2.2Year wise Import 11

2.3Trade balance 12

2.4Composition of export, import & trade balance 13

2.5Year wise top imported goods 14-16

2.6Year wise top exported goods17

2.7Year wise export destination country 18-29

2.8Year wise import destination country30-43

2.9FDI inflow44

Chapter 03 Conclusions45

3.1 Findings: 46

3.2Recommendations46

3.3Conclusions 46

3.4Bibliography47

3.5Appendix 47

CHAPTER 01INTRODUCTION

At the time of preparing this report we would like to express gratitude to Almighty Allah for special blessing in completing it. Preparing a report is really a great task. A lot of efforts and study has gone in to make this report a reality. This report is an accumulation of many peoples endeavor. We are indebted to BANGLADESH BANK for providing us sufficient information to prepare this report.We would also like to acknowledge Md. Sajib Hossain, Lecturer of department of finance, for giving us the opportunity to make such report.

The importance of gathering practical knowledge during the study life along with the theoretical knowledge has got same or sometime even more importance. Again practical knowledge is more necessary for the course International Trade and Finance, code F-305. For that we were told to make a report on Empirical Analysis of Foreign Trade Composition, Performance and trend of Bangladesh from our honorable course teacher MD. Sajib Hossain.

The primary objective of this report is to fulfill the requirement of International Trade And Finance (F-305) Department of Finance, University of Dhaka.The secondary objectives of this report are listed below: To know about the composition of export, import and trade balance of Bangladesh. To know about how Bangladesh performs in export and import. To know about the balance of trade of Bangladesh. To know about top 5 imported countries from which Bangladesh imports. To know about top 5 exported countries to which Bangladesh exports. To know about major exported and imported goods of Bangladesh. To know about Foreign Direct Investment of Bangladesh.

For preparing this report we have used statistical tools such as bar graph, pie chart and trend line. We also collected data from the internet and the website of Bangladesh Bank. We also visit Bangladesh Bank to collect more information about export and import of Bangladesh. This report is outcome of few days long effort and group work. The preparation and submission of this report is a course requirement of International Trade and Finance, code F-305 Bachelor of Business Studies, University of Dhaka.

The main problem faced in preparing this report was the difficulty of selecting the appropriate data for the report. We have also faced timing problem. However, with all these limitations, we tried our best to prepare this repo. So, users of this report are requested to consider these limitations while reading and justifying any part of our report.

Definition Of Some Important Terms Related To This Report:EXPORT : When home country fulfills its own demand , then the country sells its surplus goods to the foreign country. It is called that the country engaging itself in export.IMPORT : When home country can not fulfills its own demands by domestically produced goods, then it has to buy goods to meet its own demand from foreign country. It is called that the country engaging itself in import. TRADE BALANCE : Trade Balance is the difference between export and import. Trade Balace can be either surplus or deficit. When export amount exceeds import,then it is called Trade Surplus. Again when import amount exceeds export, then it is called Trade Deficit.BALANE OF PAYMENT: The Balance of payment of a country is a systematic record of all economic transactions between residents of that country and the rest of the world during a given period of time.FDI : FDI means Foreign Direct Investment.A home investor invests in the foreign market to capture higher return, to diversify risk and to take advantages from foreign market.When an investor assumes that the foreign currency appreciates against its ows currency, the investor invests in that countrys foreign market to capture higher return.

CHAPTER 02EMPIRICAL ANALYSIS

2.1 YEAR WISE EXPORT

Explanation : From the information and graph we can say that the amount of export receipt are gradually increased, so the performance of Bangladesh is good in export area.

2.2 YEAR WISE IMPORT

Explanation: The amount of import payments are increased gradually. Because the demand of those importing goods are very high in our country but Bangladesh can not supply domestically.

2.3 TRADE BALANCE OF BANGLADESH

Explanation: From the graph we can see that Bangladesh have trade deficit. Because the amount of import payment exceeds the amount of export receipt.

2.4 COMPOSITION OF EXPORT, IMPORT & TRADE BALANCE

Explanation: From the graph we can see that the amount of export receipt & import payments are increased gradually but the import payments increased more than the export receipt that create trade deficit.

2.5 YEARWISE TOP IMPORTED GOODS

YEAR 1990 -2000

YEAR 2000-2012

Explanation: The textile and articles were first position from the year 1990-2000, after year 2000 these goods were in second position.

Explanation: From the year 1990- 2000 the wheat was in second position. After the year 2000 another product was replaced the position.

Explanation: From the graph we can see that POL was in third position from the year 1990- 2011.

Explanation: The EDIBLE OIL was in fourth position from the 1990-2011.

Explanation: The Crude Petroleum was in fifth position from the 1990-2011.

2.6 YEARWISE TOP EXPORTED GOODS

Explanation: From the trend line we can see that the major exported goods are gradually increased such as readymade garments, Frozen Food, Jute Goods ,Leather, Chemical products and Engineering products. The export performance of Bangladesh is good but it can not exceeds the import payments that created trade deficit.

2.7 YEARWISE EXPORT DESTINATION COUNTRY

Year 1990-91

Year 1991-92

Year 1992-93 Explanation: From the financial year 1990-93 the major exported countries were USA, GERMANY, UK, ITALY & FRANCE , here USA was in the top position. Year 1993 -94

Explanation: In the financial year 1993-94 Italy was in the last position but previous year France was in the last position.

Year 1994 -95

Year 1994 -95

Explanation: In the financial year 1994-95 GERMANY was replaced by UK and ITALY was replaced by FRANCE

Year1995-96

Explanation: In the financial year 1995-96 GERMANY was replaced by FRENCE and GERMANY was run out from the top five exporting country & FRENCE took third position.

Year 1996-97

Year 1997-98

Year 1998-99

Explanation: From the financial year 1997-99 the top five exporting countries were USA, UK ,GERMANY, FRANCE & ITALY and Netherlands has gone out from the top five exported countries.Year 1999-2000

Explanation: In financial year Italy was replaced by Netherlands.Year 2000-01

Year 2001-02

Year 2002-03

Explanation: From the financial year 2001-02 Italy was in last position but in the year 2003 Italy was replaced by Netherlands.Year 2003-04

Year 2004-05

Year 2005-06

Explanation: From the year 2003- 06 USA was placed by Germany and UK was placed by Belgium. Finally Netherlands replaced by Canada.Year 2006-07

Year 2007-08

Explanation: In the financial year 2006-07 & 2007-08 Germany, France, Italy were is position first, second & third repectively.Year 2008-09

Explanation: In the year 2008-09 the top five exported countries were Germany, France, Denmark ,Italy & India.

Year 2009-10

Explanation: In the year 2008-09 the top five exported countries were Germany, France, Italy ,Denmark & IndiaYear 2010-11

Explanation: In the year 2008-09 the top five exported countries were Germany, Canada, Belgium , Italy ,Denmark & France.

Year 2011-12

Explanation: In the year 2008-09 the top five exported countries were Germany, France, Japan, Italy & Denmark

2.8 YEARWISE IMPORT DESTINATION COUNTRY

YEAR 1990-1991

EXPLANATION: In the financial year of 1990-1991,Bangladesh imported more goods from Japan and Singapore. It imported almost same amount from other three countries such as: Hong Kong, India and USA.

YEAR 1991-1992

EXPLANATION: In the financial year of 1991-1992,Bangladesh imported more goods from Japan and Singapore. It imported almost same amount from other three countries such as: Hong Kong, India and USA

YEAR 1992-1993

EXPLANATION: In the financial year of 1992-1993,Bangladesh imported more goods from Japan and India. It imported goods from other three countries such as: Hong Kong ,Korea and China.

YEAR 1993-1994

EXPLANATION: In the financial year of 1993-1994,Bangladesh imported more goods from Japan and India. It imported goods from other three countries such as: Hong Kong ,Korea and China

YEAR 1994-1995

EXPLANATION : From the graph we can see that in year 1994-1995 Bangladesh imported most of the goods from India and Japan.It also imported from other countries such as : China , Hong Kong and Korea.

YEAR 1995-1996

EXPLANATION : From the graph we can see that in year 1995-1996 Bangladesh imported most of the goods from India and China. It also imported from other countries such as :Japan, Hong Kong and Korea

YEAR 1996-1997

EXPLANATION : From the graph we can see that in year 1996-1997, Bangladesh imported most of the goods from India and Japan .It also imported from other countries such as : China , Hong Kong and Korea.

YEAR 1997-1998

EXPLANATION : From the graph we can see that in year 1997-1998 Bangladesh imported most of the goods from India and China. It also imported from other countries such as :Japan, Hong Kong and Korea

YEAR 1998-1999

EXPLANATION: In the financial year of 1998-1999,Bangladesh imported more goods from India. It imported goods almost same amount from other countries such as :China Japan and Hong Kong ,lowest amount from Korea .

YEAR 2000-2001

EXPLANATION: In the financial year of 2000-2001,Bangladesh imported more goods from India. It imported goods almost same amount from other countries such as : Japan and Singapore ,lowest amount from Hong Kong.

YEAR 2002-2003

EXPLANATION : From the graph we can see that in year 2002-2003 Bangladesh imported most of the goods from India. It also imported almost same amount of goods from other countries such as :Singapore and China.

YEAR 2005-2006

EXPLANATION: In the financial year of 2005-2006,Bangladesh imported more goods from China. It imported goods from other countries such as :India, Kuwait, Singapore ,lowest amount from Japan.

YEAR 2006-2007

EXPLANATION : From the graph we can see that in year 2006-2007 Bangladesh imported most of the goods from China and India. It also imported almost same amount of goods from other countries such as :Kuwait and Singapore and lowest amount from Taiwan .

YEAR 2007-2008

EXPLANATION: In the financial year of 2007-2008,Bangladesh imported more goods from India and China. It imported goods from other countries such as :Kuwait, Singapore ,lowest amount from Japan.YEAR 2008-2009

EXPLANATION : From the graph we can see that in year 2008-2009, Bangladesh imported most of the goods from China and India. It also imported goods from other countries such as : Singapore, Japan and Kuwait.

YEAR 2009-2010

EXPLANATION: In the financial year of 2009-2010,Bangladesh imported more goods from China and India. It imported goods from other countries such as : Singapore ,lowest amount from Malaysia.

YEAR 2010-2011

EXPLANATION : From the graph we can see that in year 2010-2011, Bangladesh imported most of the goods from China and India. It also imported goods from other countries such as : Singapore, Japan and Kuwait.

YEAR 2011-2012

EXPLANATION : From the graph we can see that in year 2011-2012, Bangladesh imported most of the goods from China and India. It also imported goods from other countries such as : Singapor

2.9 FDI INFLOW OF BANGLADESH

Explanation: From the trend line we can see that Foreign Direct Investment inflow of Bangladesh were in ups & down slope. The highest FDI inflow was in the financial year 2011-12 and the lowest FDI inflow was in the financial year 2003-04.

CHAPTER 03CONCLUSION

3.1 FINDINGS:

.We get a brief concept about composition of export, import and trade balance of Bangladesh. We also get a brief concept about the performance of Bangladesh in the area oexport and import. We also get knowledge about top 5 imported and exported goods of Bangladesh. We know about the country from which Bangladesh import. We have known about the country to which Bangladesh export. Finally we get a brief concept of foreign direct investment of Bangladesh.

3.2 RECOMMENDATIONS:

Bangladesh should increase the amount of export. Bangladesh also should reduce amount of import. Bangladesh also should increase Foreign direct investment to take advantage of international diversification. It also should export in developed countries. It should try to maintain balance of payments. It should increase domestic production so that it can able to export more goods and reduce the amount of imports.

3.3 CONCLUSIONS:

From the report we find that the amount of import and export are gradually increased. The overall composition of import, export and trade balance of Bangladesh are not favorable. The foreign direct of investment of Bangladesh are increased year by year. The major imported and exported country are USA, GERMANY, ITALY ,FRANCE, NETHERLANDS, INDIA etc. The amount of import exceeds the amount of export that create trade deficit. Finally we can say that the performance of Bangladesh is good in the area of export but not better in the area of import.

3.4BIBLIOGRAPHY:

International Economics- By Paul R. Krugman and Maurice Obstfeld. Visiting Bangladesh Bank. Website of Bangladesh Bank. Suggested guideline of course teacher.

3.5 APPENDIX:

This section includes all data collected from BANGLADESH BANK

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