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Domestic Demand, Export and Economic Growth in Bangladesh: A Cointegration and VECM Approach

Published in Economics (Volume 4, Issue 1)
Received: 13 January 2015     Accepted: 25 January 2015     Published: 30 January 2015
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Abstract

Using cointegration and error-correction mechanism techniques, this paper investigated the causal relationship between domestic demand, export and economic growth using data pertaining to Bangladesh’s final household consumption and government consumption as a measure of domestic demand, real exports, and real GDP over the period 1971–2011. It is found that final household consumption, final government consumption and export influence short-run and long-run economic growth. Thus, there is a dynamic relationship among domestic demand, export, and economic growth in Bangladesh. Moreover, economic growth in Bangladesh has an impact on its domestic demand and exports in the short-run, but in the long-run economic growth has an impact on final household consumption only.

Published in Economics (Volume 4, Issue 1)
DOI 10.11648/j.eco.20150401.11
Page(s) 1-10
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Domestic Demand, Export, Economic Growth, Cointegration, VECM, Bangladesh

References
[1] Abu, Stait, F. 2005. Are Exports the Engine of Economic Growth? An Application of Cointegration and Causality Analysis for Egypt, 1977-2003. Economic Research, Working Paper Series.
[2] Ahmed, H.A., Uddin, M.G.S.2009.Export, Imports, Remittance and Growth in Bangladesh: An Empirical Analysis, Trade and Development Review, 2(2), 79-92.
[3] Al Mamun, K. A., Nath H. K. (2005). Export-led growth in Bangladesh: A Time Series Analysis. Applied Economics Letters, 12, 361–364.
[4] Asian Development Bank (ADB).2005. Asian Development Outlook, 2005, Asia Development Bank.
[5] Bangladesh Bank (BB). 2012. Major Economic Indicator, Monthly Update. Monetary Policy Department, Bangladesh Bank, Volume: 08/2013, August 2013.
[6] Bangladesh Bureau of Statistics (BBS). 2002. Statistical Yearbook of Bangladesh, Ministry of Planning, Dhaka.
[7] Bangladesh Bureau of Statistics (BBS). 2012. Statistical Yearbook of Bangladesh, Ministry of Planning, Dhaka.
[8] Central Intelligence Agency (CIA), 2011. World Fact Book, Retrieved 2011-01-04.
[9] Chimobi, Philip, Uche, O., Charles, U. 2010. Export, Domestic Demand and Economic Growth in Nigeria: Granger Causality Analysis. European Journal of Social Sciences, 13(2), 2-11
[10] Engle, R.F., Granger C.W.J., 1987. Cointegration and Error Correction Representation, Estimation and Testing”, Econometrica, 55, 1-87.
[11] Export Promotion Bureau (EPB).2012. Bangladesh Export Statistics. Information Division of Export Promotion Bureau, Ministry of Commerce, Bangladesh.
[12] Felipe, J., Lim J.A. 2005. Export or Domestic-led Growth in Asia? Asian Development Review, 22(2), 35-75.
[13] Granger C.W. J. 1969.Investing causal relations by econometric models and cross-spectral methods. Econometrica, 37(3), 424-438.
[14] Johansen, S. 1988. Statistical Analysis of Cointegration Vectors. Journal of Economic Dynamics and Control, 12, 231-254.
[15] Wah L. Y. 2010. The role of domestic demand in the economic growth of Malaysia: a cointegration analysis. International Economic Journal, 18(3), 337-352.
[16] Ramos, F.F.R. 2000. Exports, imports, and economic growth in Portugal: evidence from causality and cointegration analysis. Journal of Economic Modeling, 18, 613-623.
[17] Tesen, H.W., 2007. Export Domestic Demand and Economic Growth: Some Empirical Evidence of Middle East Countries. Journal of Economic Cooperation, 28(2), 52-82.
[18] Wong, H. T. 2008. Exports and Domestic Demand: Some Empirical Evidence in Asean-5.Labuan Bulletin of International Business & Finance, 6, 39-55.
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  • APA Style

    Md. Khairul Islam, Md. Elias Hossain. (2015). Domestic Demand, Export and Economic Growth in Bangladesh: A Cointegration and VECM Approach. Economics, 4(1), 1-10. https://doi.org/10.11648/j.eco.20150401.11

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    ACS Style

    Md. Khairul Islam; Md. Elias Hossain. Domestic Demand, Export and Economic Growth in Bangladesh: A Cointegration and VECM Approach. Economics. 2015, 4(1), 1-10. doi: 10.11648/j.eco.20150401.11

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    AMA Style

    Md. Khairul Islam, Md. Elias Hossain. Domestic Demand, Export and Economic Growth in Bangladesh: A Cointegration and VECM Approach. Economics. 2015;4(1):1-10. doi: 10.11648/j.eco.20150401.11

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  • @article{10.11648/j.eco.20150401.11,
      author = {Md. Khairul Islam and Md. Elias Hossain},
      title = {Domestic Demand, Export and Economic Growth in Bangladesh: A Cointegration and VECM Approach},
      journal = {Economics},
      volume = {4},
      number = {1},
      pages = {1-10},
      doi = {10.11648/j.eco.20150401.11},
      url = {https://doi.org/10.11648/j.eco.20150401.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20150401.11},
      abstract = {Using cointegration and error-correction mechanism techniques, this paper investigated the causal relationship between domestic demand, export and economic growth using data pertaining to Bangladesh’s final household consumption and government consumption as a measure of domestic demand, real exports, and real GDP over the period 1971–2011. It is found that final household consumption, final government consumption and export influence short-run and long-run economic growth. Thus, there is a dynamic relationship among domestic demand, export, and economic growth in Bangladesh. Moreover, economic growth in Bangladesh has an impact on its domestic demand and exports in the short-run, but in the long-run economic growth has an impact on final household consumption only.},
     year = {2015}
    }
    

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    T1  - Domestic Demand, Export and Economic Growth in Bangladesh: A Cointegration and VECM Approach
    AU  - Md. Khairul Islam
    AU  - Md. Elias Hossain
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    DO  - 10.11648/j.eco.20150401.11
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    JO  - Economics
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    PB  - Science Publishing Group
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    UR  - https://doi.org/10.11648/j.eco.20150401.11
    AB  - Using cointegration and error-correction mechanism techniques, this paper investigated the causal relationship between domestic demand, export and economic growth using data pertaining to Bangladesh’s final household consumption and government consumption as a measure of domestic demand, real exports, and real GDP over the period 1971–2011. It is found that final household consumption, final government consumption and export influence short-run and long-run economic growth. Thus, there is a dynamic relationship among domestic demand, export, and economic growth in Bangladesh. Moreover, economic growth in Bangladesh has an impact on its domestic demand and exports in the short-run, but in the long-run economic growth has an impact on final household consumption only.
    VL  - 4
    IS  - 1
    ER  - 

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Author Information
  • Department of Economics, University of Rajshahi, Rajshahi-6205, Bangladesh

  • Department of Economics, University of Rajshahi, Rajshahi-6205, Bangladesh

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