Abstract

Bangladesh, with spectacular growth in both exports and output in recent years, has drawn attention to the hypothesis of export-led growth. The results on this hypothesis are nevertheless inconclusive. By selecting a relatively liberalized regime from 1979 to 2010, this study engages both the Johansen cointegration approach and innovation accounting with Bangladesh’s output, exports, and imports. This comprehensive approach finds significant evidence on export-led growth in Bangladesh for both the long run and the short run. It finds that output growth also leads to export expansion. While export-import feedback is high, the import-output relation appears to be insignificant for the country. These findings suggest further export promotion and import liberalization not only for Bangladesh, but also for other emerging economies that aspire to grow fast but confront dilemmas with economic openness.

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