Journal ArticleOpen Access
FDI, Trade Openness, Capital Formation, and Economic Growth in Bangladesh: A Linkage Analysis
Authors
Author Affiliations
Ritsumeikan Asia Pacific University
Published InInternational Journal of Business and Management
Year2010
Citations197
Abstract
This paper examines the linkage between FDI, trade openness, capital formation, and economic growth rates inBangladesh over a period 1986 to 2008 using time series analysis. All variables are found stationary at firstdifferencing both at constant and constant plus trend level under the ADF and PP stationary tests. TheJohansen-Juselius procedure is applied to test the cointegrating relation between variables followed by a vectorerror correction model. The empirical results trace a strong long-run equilibrium relationship between GDPgrowth rates and the explanatory variables with unidirectional casual flows. The volume of FDI and level ofcapital formation are found to have significant positive effect on changes in real GDP. The degree of tradeopenness unleashes negative but diminishing influence on GDP growth rates. We conclude…
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Fields & Keywords
Social SciencesEconomics, Econometrics and FinanceGeneral Economics, Econometrics and FinanceGlobal trade and economicsInternational Business and FDIFiscal Policy and Economic GrowthEconometricsMonetary economicsMacroeconomicsStatisticsEconomic growthComposite materialArchaeologySocial psychologyBiochemistryLaw