Does Export affect the Economic Growth? : An empirical investigation for Bangladesh
Corresponding Author(s) : Md. Golam Kibria
kibria.eco@nstu.edu.bd
American Journal of Economics and Business Management,
Vol. 3 No. 1 (2020): AJEBM
Abstract
To reveal the answer of the central debate as economic performance is export-led, this paper examines time series evidence to investigate the response of export to the economic growth of Bangladesh during 1980 to 2018. During this period, Bangladesh changed its economic philosophy to expand export market focusing both traditional and manufacturing product. Using Granger Causality test, the study finds a unidirectional causal effect from export and terms of trade to economic growth, while there is no causal effect of economic growth to export and terms and trade. Also, this empirical study reveals a bidirectional causal relationship between export and terms of trade.
Keywords
Exports
Economic growth
Unit Root test
Granger causality test
Kibria, M. G., & Hossain, M. S. (2020). Does Export affect the Economic Growth? : An empirical investigation for Bangladesh. American Journal of Economics and Business Management, 3(1), 219–226. https://doi.org/10.31150/ajebm.v3i1.135
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References
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Abdulai, A., & Jacquet, P. (2002). Exports and economic growth: cointegration and causality evidence for Cote d’Ivoire. African Development Review, 14(1), 1-17.
Afxentiou, P. C., & Serletis, A. (1992). Openness in the Canadian economy: 1870–1988. Applied Economics, 24(11), 1191-1198.
Ahmed, H. A., & Uddin, M. G. S. (2009). Export, imports, remittance and growth in Bangladesh: An empirical analysis. Trade and Development review, 2(2).
Ahmed, N. (2000). Export response to trade liberalization in Bangladesh: a cointegration analysis. Applied Economics, 32(8), 1077-1084.
Al Mamun, K. A., & Nath*, H. K. (2005). Export-led growth in Bangladesh: a time series analysis. Applied Economics Letters, 12(6), 361-364.
Bahmani-Oskooee, M. (1993). Export growth and economic growth: An application of cointegration and error-correction modeling. The Journal of Developing Areas, 27(4), 535-542.
Bahmani-Oskooee, M., Mohtadi, H., & Shabsigh, G. (1991). Exports, growth and causality in LDCs: A re-examination. Journal of Development Economics, 36(2), 405-415.
Balassa, B. (1978). Exports and economic growth: further evidence. Journal of development Economics, 5(2), 181-189.
Balassa, B. (1985). Exports, policy choices, and economic growth in developing countries after the 1973 oil shock. Journal of development economics, 18(1), 23-35.
Baldwin, R. E., Forslid, R., & Haaland, J. I. (1996). Investment creation and diversion in Europe. World Economy, 19(6), 635-659.
Begum, S., & Shamsuddin, A. F. (1998). Exports and economic growth in Bangladesh. The Journal of Development Studies, 35(1), 89-114.
Bhagwati, J., & Srinivasan, T. (1979). Trade policy and development, International Economic Policy: Theory and Evidence, R. Dornbusch y J. Frenkel.
Chenery, H. B., & Strout, A. M. (1966). Foreign Assistance and Economic Development. The American Economic Review, 56(4), 679-733.
Chow, P. C. (1987). Causality between export growth and industrial development: empirial evidence from the NICs. Journal of development Economics, 26(1), 55-63.
Dickey, D. A., & Fuller, W. A. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica: journal of the Econometric Society, 1057-1072.
Dodaro, S. (1991). Comparative advantage, trade and growth: export-led growth revisited. World Development, 19(9), 1153-1165.
Edwards, S. (1992) “Trade Liberalization and Growth in Developing Countries” Journal of Development Economics, Vol. 39: 31-57.
Feder, G. (1983). On exports and economic growth. Journal of development economics, 12(1-2), 59-73.
Ghirmay, T., Grabowski, R., & Sharma, S. C. (2001). Exports, investment, efficiency and economic growth in LDC: an empirical investigation. Applied Economics, 33(6), 689-700.
Granger, C. W. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica: Journal of the Econometric Society, 424-438.
GROSSMAN, G. M., & HELPMAN, E. (1990). Comparative Advantage and Long-Run Growth. The American Economic Review, 80(4), 796-815.
Hatemi-j, A. (2002). Export performance and economic growth nexus in Japan: a bootstrap approach. Japan and the World Economy, 14(1), 25-33.
Helpman, E., & Krugman, P. R. (1985). Market structure and foreign trade: Increasing returns, imperfect competition, and the international economy. MIT press.
Jung, W. S., & Marshall, P. J. (1985). Exports, growth and causality in developing countries. Journal of development economics, 18(1), 1-12.
Kaldor, N. (1967). Strategic Factors in Economic Development: Liberalization Attempts and Consequences. Ballinger, Cambridge, MA.
Krueger, A. O. (1980). Trade Policy as an Input to Development. The American Economic Review, 70(2), 288-292.
Levin, A., & Raut, L. K. (1997). Complementarities between exports and human capital in economic growth: evidence from the semi-industrialized countries. Economic development and cultural change, 46(1), 155-174.
Lopez, R., & Mundial, B. (1991). How trade and macroeconomic policies affect economic growth and capital accumulation in developing countries (No. 625). Trade Policy Division, Country Economics Department, The World Bank.
McKinnon, R. I. (1964). Foreign exchange constraints in economic development and efficient aid allocation. The Economic Journal, 74(294), 388-409.
Michaely, M. (1977). Exports and growth: an empirical investigation. Journal of development economics, 4(1), 49-53.
Ram, R. (1985). Exports and economic growth: Some additional evidence. Economic Development and Cultural Change, 33(2), 415-425.
Rivera-Batiz, L. A., & Romer, P. M. (1991). Economic integration and endogenous growth. The Quarterly Journal of Economics, 106(2), 531-555.
Rodrik, D. (1988). Closing the Technology Gap: Does Trade Liberalization Really Help?. NBER Working Paper, (w2654).
Segerstrom, P. S., Anant, T. C., & Dinopoulos, E. (1990). A Schumpeterian model of the product life cycle. The American Economic Review, 1077-1091.
Shan, J., & Sun, F. (1998). On the export-led growth hypothesis: the econometric evidence from China. Applied Economics, 30(8), 1055-1065.
Shan, J., & Tian, G. G. (1998). Causality between exports and economic growth: the empirical evidence from Shanghai. Australian Economic Papers, 37(2), 195-202.
Sharma, S. C., & Dhakal, D. (1994). Causal analyses between exports and economic growth in developing countries. Applied Economics, 26(12), 1145-1157.
Tyler, W. G. (1981). Growth and export expansion in developing countries: Some empirical evidence. Journal of development Economics, 9(1), 121-130.
Wernerheim, C. M. (2000). Cointegration and causality in the exports-GDP nexus: The post-war evidence for Canada. Empirical Economics, 25(1), 111-125.
Yaghmaian, B. (1994). An empirical investigation of exports, development, and growth in developing countries: Challenging the neoclassical theory of export-led growth. World Development, 22(12), 1977-1995.
References
Abdulai, A., & Jacquet, P. (2002). Exports and economic growth: cointegration and causality evidence for Cote d’Ivoire. African Development Review, 14(1), 1-17.
Afxentiou, P. C., & Serletis, A. (1992). Openness in the Canadian economy: 1870–1988. Applied Economics, 24(11), 1191-1198.
Ahmed, H. A., & Uddin, M. G. S. (2009). Export, imports, remittance and growth in Bangladesh: An empirical analysis. Trade and Development review, 2(2).
Ahmed, N. (2000). Export response to trade liberalization in Bangladesh: a cointegration analysis. Applied Economics, 32(8), 1077-1084.
Al Mamun, K. A., & Nath*, H. K. (2005). Export-led growth in Bangladesh: a time series analysis. Applied Economics Letters, 12(6), 361-364.
Bahmani-Oskooee, M. (1993). Export growth and economic growth: An application of cointegration and error-correction modeling. The Journal of Developing Areas, 27(4), 535-542.
Bahmani-Oskooee, M., Mohtadi, H., & Shabsigh, G. (1991). Exports, growth and causality in LDCs: A re-examination. Journal of Development Economics, 36(2), 405-415.
Balassa, B. (1978). Exports and economic growth: further evidence. Journal of development Economics, 5(2), 181-189.
Balassa, B. (1985). Exports, policy choices, and economic growth in developing countries after the 1973 oil shock. Journal of development economics, 18(1), 23-35.
Baldwin, R. E., Forslid, R., & Haaland, J. I. (1996). Investment creation and diversion in Europe. World Economy, 19(6), 635-659.
Begum, S., & Shamsuddin, A. F. (1998). Exports and economic growth in Bangladesh. The Journal of Development Studies, 35(1), 89-114.
Bhagwati, J., & Srinivasan, T. (1979). Trade policy and development, International Economic Policy: Theory and Evidence, R. Dornbusch y J. Frenkel.
Chenery, H. B., & Strout, A. M. (1966). Foreign Assistance and Economic Development. The American Economic Review, 56(4), 679-733.
Chow, P. C. (1987). Causality between export growth and industrial development: empirial evidence from the NICs. Journal of development Economics, 26(1), 55-63.
Dickey, D. A., & Fuller, W. A. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica: journal of the Econometric Society, 1057-1072.
Dodaro, S. (1991). Comparative advantage, trade and growth: export-led growth revisited. World Development, 19(9), 1153-1165.
Edwards, S. (1992) “Trade Liberalization and Growth in Developing Countries” Journal of Development Economics, Vol. 39: 31-57.
Feder, G. (1983). On exports and economic growth. Journal of development economics, 12(1-2), 59-73.
Ghirmay, T., Grabowski, R., & Sharma, S. C. (2001). Exports, investment, efficiency and economic growth in LDC: an empirical investigation. Applied Economics, 33(6), 689-700.
Granger, C. W. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica: Journal of the Econometric Society, 424-438.
GROSSMAN, G. M., & HELPMAN, E. (1990). Comparative Advantage and Long-Run Growth. The American Economic Review, 80(4), 796-815.
Hatemi-j, A. (2002). Export performance and economic growth nexus in Japan: a bootstrap approach. Japan and the World Economy, 14(1), 25-33.
Helpman, E., & Krugman, P. R. (1985). Market structure and foreign trade: Increasing returns, imperfect competition, and the international economy. MIT press.
Jung, W. S., & Marshall, P. J. (1985). Exports, growth and causality in developing countries. Journal of development economics, 18(1), 1-12.
Kaldor, N. (1967). Strategic Factors in Economic Development: Liberalization Attempts and Consequences. Ballinger, Cambridge, MA.
Krueger, A. O. (1980). Trade Policy as an Input to Development. The American Economic Review, 70(2), 288-292.
Levin, A., & Raut, L. K. (1997). Complementarities between exports and human capital in economic growth: evidence from the semi-industrialized countries. Economic development and cultural change, 46(1), 155-174.
Lopez, R., & Mundial, B. (1991). How trade and macroeconomic policies affect economic growth and capital accumulation in developing countries (No. 625). Trade Policy Division, Country Economics Department, The World Bank.
McKinnon, R. I. (1964). Foreign exchange constraints in economic development and efficient aid allocation. The Economic Journal, 74(294), 388-409.
Michaely, M. (1977). Exports and growth: an empirical investigation. Journal of development economics, 4(1), 49-53.
Ram, R. (1985). Exports and economic growth: Some additional evidence. Economic Development and Cultural Change, 33(2), 415-425.
Rivera-Batiz, L. A., & Romer, P. M. (1991). Economic integration and endogenous growth. The Quarterly Journal of Economics, 106(2), 531-555.
Rodrik, D. (1988). Closing the Technology Gap: Does Trade Liberalization Really Help?. NBER Working Paper, (w2654).
Segerstrom, P. S., Anant, T. C., & Dinopoulos, E. (1990). A Schumpeterian model of the product life cycle. The American Economic Review, 1077-1091.
Shan, J., & Sun, F. (1998). On the export-led growth hypothesis: the econometric evidence from China. Applied Economics, 30(8), 1055-1065.
Shan, J., & Tian, G. G. (1998). Causality between exports and economic growth: the empirical evidence from Shanghai. Australian Economic Papers, 37(2), 195-202.
Sharma, S. C., & Dhakal, D. (1994). Causal analyses between exports and economic growth in developing countries. Applied Economics, 26(12), 1145-1157.
Tyler, W. G. (1981). Growth and export expansion in developing countries: Some empirical evidence. Journal of development Economics, 9(1), 121-130.
Wernerheim, C. M. (2000). Cointegration and causality in the exports-GDP nexus: The post-war evidence for Canada. Empirical Economics, 25(1), 111-125.
Yaghmaian, B. (1994). An empirical investigation of exports, development, and growth in developing countries: Challenging the neoclassical theory of export-led growth. World Development, 22(12), 1977-1995.
Afxentiou, P. C., & Serletis, A. (1992). Openness in the Canadian economy: 1870–1988. Applied Economics, 24(11), 1191-1198.
Ahmed, H. A., & Uddin, M. G. S. (2009). Export, imports, remittance and growth in Bangladesh: An empirical analysis. Trade and Development review, 2(2).
Ahmed, N. (2000). Export response to trade liberalization in Bangladesh: a cointegration analysis. Applied Economics, 32(8), 1077-1084.
Al Mamun, K. A., & Nath*, H. K. (2005). Export-led growth in Bangladesh: a time series analysis. Applied Economics Letters, 12(6), 361-364.
Bahmani-Oskooee, M. (1993). Export growth and economic growth: An application of cointegration and error-correction modeling. The Journal of Developing Areas, 27(4), 535-542.
Bahmani-Oskooee, M., Mohtadi, H., & Shabsigh, G. (1991). Exports, growth and causality in LDCs: A re-examination. Journal of Development Economics, 36(2), 405-415.
Balassa, B. (1978). Exports and economic growth: further evidence. Journal of development Economics, 5(2), 181-189.
Balassa, B. (1985). Exports, policy choices, and economic growth in developing countries after the 1973 oil shock. Journal of development economics, 18(1), 23-35.
Baldwin, R. E., Forslid, R., & Haaland, J. I. (1996). Investment creation and diversion in Europe. World Economy, 19(6), 635-659.
Begum, S., & Shamsuddin, A. F. (1998). Exports and economic growth in Bangladesh. The Journal of Development Studies, 35(1), 89-114.
Bhagwati, J., & Srinivasan, T. (1979). Trade policy and development, International Economic Policy: Theory and Evidence, R. Dornbusch y J. Frenkel.
Chenery, H. B., & Strout, A. M. (1966). Foreign Assistance and Economic Development. The American Economic Review, 56(4), 679-733.
Chow, P. C. (1987). Causality between export growth and industrial development: empirial evidence from the NICs. Journal of development Economics, 26(1), 55-63.
Dickey, D. A., & Fuller, W. A. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica: journal of the Econometric Society, 1057-1072.
Dodaro, S. (1991). Comparative advantage, trade and growth: export-led growth revisited. World Development, 19(9), 1153-1165.
Edwards, S. (1992) “Trade Liberalization and Growth in Developing Countries” Journal of Development Economics, Vol. 39: 31-57.
Feder, G. (1983). On exports and economic growth. Journal of development economics, 12(1-2), 59-73.
Ghirmay, T., Grabowski, R., & Sharma, S. C. (2001). Exports, investment, efficiency and economic growth in LDC: an empirical investigation. Applied Economics, 33(6), 689-700.
Granger, C. W. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica: Journal of the Econometric Society, 424-438.
GROSSMAN, G. M., & HELPMAN, E. (1990). Comparative Advantage and Long-Run Growth. The American Economic Review, 80(4), 796-815.
Hatemi-j, A. (2002). Export performance and economic growth nexus in Japan: a bootstrap approach. Japan and the World Economy, 14(1), 25-33.
Helpman, E., & Krugman, P. R. (1985). Market structure and foreign trade: Increasing returns, imperfect competition, and the international economy. MIT press.
Jung, W. S., & Marshall, P. J. (1985). Exports, growth and causality in developing countries. Journal of development economics, 18(1), 1-12.
Kaldor, N. (1967). Strategic Factors in Economic Development: Liberalization Attempts and Consequences. Ballinger, Cambridge, MA.
Krueger, A. O. (1980). Trade Policy as an Input to Development. The American Economic Review, 70(2), 288-292.
Levin, A., & Raut, L. K. (1997). Complementarities between exports and human capital in economic growth: evidence from the semi-industrialized countries. Economic development and cultural change, 46(1), 155-174.
Lopez, R., & Mundial, B. (1991). How trade and macroeconomic policies affect economic growth and capital accumulation in developing countries (No. 625). Trade Policy Division, Country Economics Department, The World Bank.
McKinnon, R. I. (1964). Foreign exchange constraints in economic development and efficient aid allocation. The Economic Journal, 74(294), 388-409.
Michaely, M. (1977). Exports and growth: an empirical investigation. Journal of development economics, 4(1), 49-53.
Ram, R. (1985). Exports and economic growth: Some additional evidence. Economic Development and Cultural Change, 33(2), 415-425.
Rivera-Batiz, L. A., & Romer, P. M. (1991). Economic integration and endogenous growth. The Quarterly Journal of Economics, 106(2), 531-555.
Rodrik, D. (1988). Closing the Technology Gap: Does Trade Liberalization Really Help?. NBER Working Paper, (w2654).
Segerstrom, P. S., Anant, T. C., & Dinopoulos, E. (1990). A Schumpeterian model of the product life cycle. The American Economic Review, 1077-1091.
Shan, J., & Sun, F. (1998). On the export-led growth hypothesis: the econometric evidence from China. Applied Economics, 30(8), 1055-1065.
Shan, J., & Tian, G. G. (1998). Causality between exports and economic growth: the empirical evidence from Shanghai. Australian Economic Papers, 37(2), 195-202.
Sharma, S. C., & Dhakal, D. (1994). Causal analyses between exports and economic growth in developing countries. Applied Economics, 26(12), 1145-1157.
Tyler, W. G. (1981). Growth and export expansion in developing countries: Some empirical evidence. Journal of development Economics, 9(1), 121-130.
Wernerheim, C. M. (2000). Cointegration and causality in the exports-GDP nexus: The post-war evidence for Canada. Empirical Economics, 25(1), 111-125.
Yaghmaian, B. (1994). An empirical investigation of exports, development, and growth in developing countries: Challenging the neoclassical theory of export-led growth. World Development, 22(12), 1977-1995.