Exports, imports and sustainable economic growth in Bangladesh

Abstract

During the last three decades, Bangladesh has experienced substantial economic growth. Many argue that manufacturing exports are the new engine of economic growth in Bangladesh. Some studies also show empirical evidence for both export-led growth and growth-led exports in Bangladesh. However, the potential growth-enhancing contribution of imports and its causal effects is largely missing in the existing literature. In this chapter, using Autoregressive Distributed Lag framework, we examine the (causal) relationship between trade and economic growth, focusing on the role of both exports and imports on economic growth (or vice versa) in Bangladesh during 1970-2017. Our empirical results support the well-known export-led growth and growthled exports hypotheses with respect to Bangladesh. Interestingly, we also find evidence for import-led growth with some evidence for economic growth-led imports.