Does Bangladesh Have Export-Led Growth? An Empirical Study using Cobb-Douglas Production Function
Keywords:
Export-led growth, Bangladesh, Cointegration, Vector error correction model.Abstract
This study tries to analyse whether there exist a relationship between exports and output andif there is evidence of export-led growth in the context of Bangladesh. Using a Cobb Douglasproduction function framework along with Johansen Cointegration test and Vector ErrorCorrection Model for the period 1972-2012, the study finds considerable evidence for exportled growth in Bangladesh. When the bi-directional causality is tested with the VECM, thepossible causality from output to export is strongly rejected based on this study. While thepaper suggests plausible export led growth hypothesis, the other key finding is that in thecontext of Bangladesh, there is import led growth too. Import can aid in growth throughtechnology diffusion and innovation through spill over effect.References
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