The Relationship between Trade Openness and Economic Growth in Bangladesh: An Empirical Analysis

Abstract

This paper examines the relationship between trade openness and economic growth in Bangladesh. Contrary to the previous studies we use the data only for the period after the trade liberalization in the early 1990s. Both cointegration and Granger causality analysis are used to find the short-run and long-run effects of trade openness on economic growth. The result indicates that trade openness has positive and significant effects on economic growth in Bangladesh. Granger causality analysis tells us that trade openness causes economic growth in the long run, though not in the short run. Other factors like gross domestic investment, labor force, and education also cause economic growth in the long run.