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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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    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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