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Do Bangladesh and Sri Lanka Enjoy Export-Led Growth? A Comparison of Two Small South Asian Economies

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  • Muhammad Shafiullah
  • Ravinthirakumaran Navaratnam

Abstract

The export-led growth (ELG) hypothesis suggests that there is a strong positive linear relationship between a country’s exports and economic growth. For many years, theoretical and empirical studies have examined the causal relationship between exports and economic growth and found that this relationship is one of interdependence rather than of unilateral causation. The purpose of this article is to empirically re-examine the ELG hypothesis in the context of two small South Asian countries: Bangladesh for the period of 1980–2011 and Sri Lanka for the period of 1984–2011. Using a model that controls for a host of domestic and international factors, this article tests the ELG hypothesis by employing the Auto Regressive Distributed Lag (ARDL) bounds test for cointegration and the Granger causality tests. The empirical results confirm the validity of the ELG hypothesis for both Bangladesh and Sri Lanka.

Suggested Citation

  • Muhammad Shafiullah & Ravinthirakumaran Navaratnam, 2016. "Do Bangladesh and Sri Lanka Enjoy Export-Led Growth? A Comparison of Two Small South Asian Economies," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(1), pages 114-132, March.
    • Handle: RePEc:sae:soueco:v:17:y:2016:i:1:p:114-132
    DOI: 10.1177/1391561415621825
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    References listed on IDEAS

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    Cited by:

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    2. Biswajit Maitra & Moutushi Chakraborty, 2021. "International trade, human capital and economic growth in Sri Lanka," International Journal of Economic Policy Studies, Springer, vol. 15(2), pages 405-426, September.
    3. Ousama Ben-Salha & Abir Abid & Ghassen El Montasser, 2023. "Linear and Nonlinear Causal Linkages Between Exports and Growth in Next Eleven Economies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1194-1226, June.
    4. Ghulam Mustafa, 2023. "The Dynamic Relationship Between Financial Development, Economic Growth, Foreign Direct Investment and Trade Openness: Evidence from South Asian Countries," Millennial Asia, , vol. 14(3), pages 406-433, September.
    5. Adekunle Ahmed Oluwatobi & Gbadebo Adedeji Daniel & Joseph Olorunfemi Akande, 2022. "On Export and Economic Growth: A Comparative Analysis of Selected West African Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 12(4), pages 106-113, July.

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    More about this item

    Keywords

    Export-led growth; Bangladesh; Sri Lanka; ARDL bounds test; Granger causality;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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