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

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. JEL: C32, F20, F41, O11

On Export and Economic Growth: A Comparative Analysis of Selected West African Countries

“…The result in Table 3 reveals that export affect progress in the area directly. This infers that export has meaningly predisposed growth for selected West Africa countries which is consistent with previous empirical studies (Shafiullah and Navaratnam, 2016;Salim and Hossain, 2011;Mao, Ozturk and Acaravci, 2010;Federici and Marconi, 2002).…”

“…innovative technology in order to compete in auto manufacturing industries and ease access for international trade to meet up with global demand (Timmer et al, 2019;Salim and Hossain, 2011;Lee and Huang, 2002;Shafiullah and Navaratnam, 2016;Arteaga García et al, 2020;Kock, 2021). The need for export to stimulate growth depends on export demand.…”

“…The need for export to stimulate growth depends on export demand. Since the financial crisis in 2008 developed nations have not regained strength for huge global demand, some evidence (Salim 2011;Tang et al, 2015;Shafiullah et al 2016) note that the usefulness of the ELG paradigm may now be exhaustive. This raises concern on the efficacy of the ELG nexus (Li et al, 2015;Shafiullah et al, 2017;Felipe and Lanzafame, 2019;Tang and Abosedra, 2021).…”

Foreign Direct Investments, Renewable Electricity Output, and Ecological Footprints: Do Financial Globalization Facilitate Renewable Energy Transition and Environmental Welfare in Bangladesh?

“…Furthermore, involvement in international trade is also found to suppress the REO shares which can be rationalized by the claim that the export sector of Bangladesh is predominantly dependent on the use of non-renewable electric power. Bangladesh relies heavily on its ready-made garments exports due to pursuing an export-led growth strategy (Shafiullah and Navatnam, 2016 ). However, the associated industries overwhelmingly intensive in the use of non-renewable electricity (Paul et al, 2017 ) whereby higher openness to trade justifiably dampens the REO shares.…”

The Dynamic Relationship Between Financial Development, Economic Growth, Foreign Direct Investment and Trade Openness: Evidence from South Asian Countries

“…Bangladesh moved on the path of a free-market economy by opening various sectors to private players, limiting restrictions, and attracting foreign capital by making suitable policies since the 1990s (Shafiullah & Navaratnam, 2016). Sri Lanka started economic liberalization in 1977 (Shafiullah & Navaratnam, 2016). During the 1970s its economy was inward-oriented and the trade and exchange rates were regulated by the government (Rajapatirana, 1989).…”