Export-led growth revisited in Bangladesh: Evidence from structural break

Abstract

The paper re-examines the causal relationship between export, import and economic growth in Bangladesh for the period 1971-2009 within the vector autoregressive (VAR) framework by considering the impact of trade liberalization in 1990. The results reveal a bidirectional causality between exports and economic growth in Bangladesh. However, unidirectional causality running from imports to exports and income to imports also in the case for Bangladesh. The results of the error correction model (ECM) suggest that there is a long-run unidirectional causality from exports to growth in Bangladesh. The negative sign on the EC term confirms the expected convergence process in the long-run dynamics of exports and output. © Gazi Salah Uddin, M. Zakir Saadullah Khan, Ilhan Ozturk, 2013.