Comparative Analysis Between Export-Led Growth and Import-Led Growth: A Study on Developing Eight (D-8)

The main objective of the study is to investigate the comparative influence of import and export on economic growth of developing countries in the world, using Export-Led Growth (ELG) and Import-Led Growth (ILG) hypothesis. The study has used purposive sampling technique and selected the member countries of D-8 such as Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey as sample. Total import, total export, and GDP growth rate, as indicator of economic growth, have been used as variables for the study. The study has selected time series and panel data of the variables from year 2001 to year 2015. To detect unit root of variables, Augmented Dickey Fuller (ADF) Test and Phillips-Perron (PP) Unit Root Test have been used. Moreover, the cointegration among variables has been examined using Johansen Cointegration Test. The study has also used Vector Autoregressive (VAR) model and Vector Error Correction (VEC) model to define the presence of short run and long run causality. Finally, Granger Causality Test has been used to examine the presence of unidirectional and bidirectional causality among the variables in short and long-run. The study shows that the variables have unit root at level and have become stationary at first and second difference. In most of the selected countries, the study has found cointegration and unidirectional causality among the variables. In Bangladesh, both import and export have been found to contribute to economic growth in short run, and the relationship is unidirectional. Moreover, these have been found to influence economic growth of Nigeria in long run. On the other hand, the study has discovered economic growth and export of Turkey to granger-cause its import in short and long run. However, along with economic growth, import has been found to granger-cause export of Egypt and Indonesia in short run, and export of Malaysia in long run. Finally, Pakistan and Iran have been found to have no granger-causality among import, export and economic growth.