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Dynamics of Economic Growth, Investment and Trade Openness: Evidence from Bangladesh

Author

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  • Champa Bati Dutta
  • Mohammed Ziaul Haider
  • Debasish Kumar Das

Abstract

This article investigates the causal relationship among foreign direct investment, domestic investment, trade openness and economic growth in Bangladesh over the period 1976–2014. Unit root tests, cointegration methods and Granger causality tests in Vector Error Correction Model (VECM) framework are used to investigate the relationships. The results of Granger causality test based on a stable VECM support a unidirectional causality running from foreign direct investment to growth, domestic investment to trade openness, growth to trade openness and bidirectional causality between domestic investment and growth and foreign direct investment and domestic investment. The results support the investment complementarities in Bangladesh. JEL Classification: E22, F1, O40

Suggested Citation

  • Champa Bati Dutta & Mohammed Ziaul Haider & Debasish Kumar Das, 2017. "Dynamics of Economic Growth, Investment and Trade Openness: Evidence from Bangladesh," South Asian Journal of Macroeconomics and Public Finance, , vol. 6(1), pages 82-104, June.
    • Handle: RePEc:sae:smppub:v:6:y:2017:i:1:p:82-104
    DOI: 10.1177/2277978717695150
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    3. Milin Ioana Anda & Bușan Gabriela & Ecobici Nicolae & Abdul Rehman, 2023. "Economic Growth Drivers in Romania: Evidence from a NARDL Analysis," Sustainability, MDPI, vol. 15(7), pages 1-19, March.
    4. Bakari, Sayef, 2017. "Why is South Africa Still a Developing Country?," MPRA Paper 80763, University Library of Munich, Germany.
    5. Sharif M. Hossain & Nobuhiro Hosoe, 2017. "Foreign Direct Investment in the Ready-Made Garments Sector of Bangladesh : Macro and Distributional Implications," GRIPS Discussion Papers 17-10, National Graduate Institute for Policy Studies.
    6. Muhammed Sehid Gorus & Veli Yilanci & Maxwell Kongkuah, 2023. "FDI Inflows-Economic Globalization Nexus in ASEAN Countries: The Panel Bootstrap Causality Test Based on Wavelet Decomposition," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 30(2), pages 339-362, June.
    7. Islam, Md. Monirul & Irfan, Muhammad & Shahbaz, Muhammad & Vo, Xuan Vinh, 2022. "Renewable and non-renewable energy consumption in Bangladesh: The relative influencing profiles of economic factors, urbanization, physical infrastructure and institutional quality," Renewable Energy, Elsevier, vol. 184(C), pages 1130-1149.

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    More about this item

    Keywords

    Economic growth; foreign direct investment; domestic investment; causality;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F1 - International Economics - - Trade
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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