Trade Intensity and Revealed Comparative Advantage: An Empirical Analysis of Trade between China and Bangladesh

Abstract

This paper examines the intensity of trade between Bangladesh and China along with analyzing sector level comparative advantage of 16 export sectors of Bangladesh and China in bilateral trade. The Trade Intensity and Balassa Revealed Comparative Advantage (RCA) indices of the 20 export sectors of Bangladesh and China are examined from 1995 to 2019 to achieve the research objectives. Bangladesh's trade strength with China shows that the country has a lot of space to expand its trade with China. The revealed comparative advantage analysis of 20 exports sector of Bangladesh and China exhibits that among those 20 sectors, Bangladesh reveals high comparative advantage over 5 sectors, moderate over 4 sectors, and comparative disadvantage over 11sectors of its export to China. Moreover, China reveals moderate comparative advantage over 8 sectors and comparative disadvantage over 12 sectors of its export to Bangladesh. Based on the empirical analysis and the literature, recommendations are addressed to improve the export sectors of Bangladesh.

Keywords

• trade intensity
• comparative advantage
• bilateral trade
• bangladesh
• china