Does the export sector generate positive externality for the non-tradable sector? The case of Bangladesh, India & Pakistan

Abstract: Pakistan, India and Bangladesh are part of the developing countries in the world. These countries are continuously working hard and discovering different alternates to overcome its problems. The main objective of these south Asian countries is to stand among those countries which are considered to be developed. In my thesis I am pursuing trade as my main subject. Export is extensive issue and can affect the economy of any country in many ways. In trade I will opt for that portion, which is playing vital role in Pakistan, India and Bangladesh’s economy and affecting the economy in a severe way. I decided to focus on the two sector model to know about productivity differential between the export and non export sectors of these countries. To find out how much export, labor and investment contributes to gross domestic product within the period of 1962-2016 for Pakistan and India and 1971-2016 for Bangladesh. After working on these matter I reached to my results and I found that productivity differential between the export and non-export sectors is positive and statistically significant. I also concluded that labor force, weighted export and investment to GDP contribute positively to economic growth in these countries.