Testing export-led growth in Bangladesh in a multivariate VAR framework

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Chandra, Ramesh and Love, Jim (2005) Testing export-led growth in Bangladesh in a multivariate VAR framework. Journal of Asian Economics, 15 (6). pp. 1155-1168. ISSN 1049-0078 (http://dx.doi.org/10.1016/j.asieco.2004.11.009)

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Abstract

Although the link between trade and growth has long been discussed, systematic empirical investigation of the relationship has been undertaken only relatively recently. A number of time-series studies exist for individual countries in the area of export-led growth, but for Bangladesh there has been little work in this area. This study seeks to bridge an important gap in the literature, and is perhaps the first to use Johansen's multivariate framework taking the terms of trade as an additional variable for Bangladesh. The findings suggest that the direction of both long and short-term causality is from income to exports. This result is hardly surprising as, for most of the period covered, Bangladesh has followed an inward-looking strategy of development that discriminated against exports.

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