Trade (exports) as an opportunity for Bangladesh: A VECM analysis

ABSTRACT

This article examines the effects of trade (exports) on the economic growth of Bangladesh from 1986 to 2016, using the application of a Johansen cointegration and vector error correction model. The empirical findings exhibit that trade (exports) has a unique long-run equilibrium relationship with the economic growth of Bangladesh. The short-run results also display a robust causality between variables. This study suggests that exports play a major role in the growth of Bangladesh. Policymakers should promote the export of goods and services, especially manufactured goods, in the long term, in order to possibly reduce the trade deficit and rapidly stimulate the growth of Bangladesh.

KEYWORDS:

• Bangladesh
• economic growth
• exports
• VECM