Is Export-led Economic Growth Significant in LDCs?: Evidence from Bangladesh
Keywords:Bangladesh, LDC, GDP, Export, Economic Growth
The purpose of this piece of work is to find out whether there persists any long-run relationship between the exports and economic growth in Bangladesh as a member of the LDCs. In this connection, the export-led growth hypothesis has been tested for the Bangladeshi economy for the last three decades of timeframe. Time-series econometric approach, the Johansen Cointegration test is followed in the study to find out the long-run relationship among the variable. The Granger casualty test was done to find the direction of the casualty. The Time-series data from the period 1991 to 2020 are analyzed through several econometric test procedures. The gross domestic product is regarded as the dependent variable, whereas the Exports of goods & services and the Gross Capital Formation are considered independent variables. The estimated model is examined for a structural break using the Chow Test. The Breusch–Godfrey and Durbin-Watson tests are performed to determine whether or not autocorrelation exists. It is recognized that export-led economic growth has no long-term significance for Bangladesh's economy. The findings are consistent with those of Li et al. (2010) on low-income nations. The R-squared value of the estimated model is 83%, indicating that the model fits the data quite well. As Bangladesh is likely to become a middle-income country very soon, the study is highly pertinent to the country's current development dynamics.
Awokuse, T. O. (2007). Causality between exports, imports, and economic growth: Evidence from transition economies. Economics Letters, 94(3), 389–395. https://doi.org/10.1016/j.econlet.2006.08.025
Business Standard. (2022, July 4). Bangladesh’s exports hit all-time high of over $52 bn in FY 2021-22. Business Standard India. https://www.business-standard.com/article/international/bangladesh-s-exports-hit-all-time-high-of-over-52-bn-in-fy-2021-22-122070400034_1.html
Chaudhary, M. A., Shirazi, N., & Choudhary, M. A. (2007). TRADE POLICY AND ECONOMIC GROWTH IN BANGLADESH: A REVISIT. Undefined, 45(1). https://www.semanticscholar.org/paper/TRADE-POLICY-AND-ECONOMIC-GROWTH-IN-BANGLADESH%3A-A-Chaudhary-Shirazi/17b1b644e9126df138ae2652c0d3e5606639da1a
Elbeydi, K. R. M., Hamuda, A. M., & Gazda, V. (2010). The Relationship between Export and Economic Growth in Libya Arab Jamahiriya. Theoretical and Applied Economics, 542(1). http://www.ectap.ro/the-relationship-between-export-and-economic-growth-in-libya-arab-jamahiriya-khaled-rm-elbeydi_abdulbaset-m-hamuda_vladimir-gazda/a437/
Gujarati, D. N. (1995). Basic econometrics. Mcgraw-Hill.
Humpage, O. F. (2000). Do Imports Hinder or Help Economic Growth? Economic Commentary, March 15, 2000. https://www.clevelandfed.org/en/newsroom-and-events/publications/economic-commentary/economic-commentary-archives/2000-economic-commentaries/ec-20000315-do-imports-hinder-or-help-economic-growth.aspx
Khan, M. T. F., & Kundu, N. (2012, March 10). Future Contribution of Export and Import to GDP in Bangladesh: A Box-Jenkins Approach. Mpra.ub.uni-Muenchen.de. https://mpra.ub.uni-muenchen.de/65153/
Kim, S., Lim, H., & Park, D. (2009). Imports, exports and total factor productivity in Korea. Applied Economics, 41(14), 1819–1834. https://doi.org/10.1080/00036840601032243
Li, Y., Chen, Z., & San, C. (2010). Research on the Relationship between Foreign Trade and the GDP Growth of East China—Empirical Analysis Based on Causality. Modern Economy, 01(02), 118–124. https://doi.org/10.4236/me.2010.12012
Mah, J. S. (2005). Export expansion, economic growth and causality in China. Applied Economics Letters, 12(2), 105–107. https://doi.org/10.1080/1350485042000314343
Mishra, P. K. (2011). The Dynamics of Relationship between Exports and Economic Growth in India. International Journal of Economic Sciences and Applied Research, 4(2), 53. SSRN. https://ssrn.com/abstract=1923769
Miyan, Md. S., & Biplob, Md. N. K. (2019). Revisiting Exports, Imports and Economic Growth Nexus: Empirical Evidence from Bangladesh (1981-2017). Modern Economy, 10(02), 523–536. https://doi.org/10.4236/me.2019.102036
Panas, E., & Vamvoukas, G. (2002). Further evidence on the Export-Led Growth Hypothesis. Applied Economics Letters, 9(11), 731–735. https://doi.org/10.1080/13504850210126840
Paul, B. P. (2014). Testing Export-Led Growth in Bangladesh: An ARDL Bounds Test Approach. International Journal of Trade, Economics and Finance, 5(1), 1–5. https://doi.org/10.7763/ijtef.2014.v5.331
Subasat, T. (2002). Does Export Promotion Increase Economic Growth? Some Cross-Section Evidence. Development Policy Review, 20(3), 333–349. https://doi.org/10.1111/1467-7679.00175
Tang, T. C. (2006). New evidence on export expansion, economic growth and causality in China. Applied Economics Letters, 13(12), 801–803. https://doi.org/10.1080/13504850500425303
The Financial Express. (2022, May 30). Export diversification: Bangladesh needs huge investment in logistics. The Financial Express. https://thefinancialexpress.com.bd/trade/export-diversification-bangladesh-needs-huge-investment-in-logistics-1653888591
The World Bank. (2022). World Development Indicators | DataBank. Databank.worldbank.org. https://databank.worldbank.org/data/source/world-development-indicators
Vohra, R. (2001). Export and economic growth: Further time series evidence from less-developed countries. International Advances in Economic Research, 7(3), 345–350. https://doi.org/10.1007/bf02295403
Wooldridge, J. M. (2018). INTRODUCTORY ECONOMETRICS: a modern approach. Cengage Learning.
How to Cite
Copyright (c) 2022 AIUB Journal of Business and Economics
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.