Economic Growth through Trade and Investment: A Causality-Based Comparative Study of India and Bangladesh

Nevertheless, India and Bangladesh have close ties and are characterized as lower-middle-income nations as per the World Bank, vast differences lie in terms of foreign inows, foreign trade, and economic growth in these nations. Therefore, this research objects to examine the comparative nexus between FDI, exports, and economic growth in India and Bangladesh from 1991 to 2023. The study employs the Autoregressive Distributed Lag (ARDL) model to analyze both long-term and short-term effects of FDI and exports on economic growth. The findings indicate a long-term connection between FDI, exports, and economic growth in both countries. Additionally, the long-term and short-term estimators demonstrate that FDI and exports positively influence economic growth. The study points out that India and Bangladesh are required to boost FDI for economic growth and to promote export-intensive policies to contain their diminishing exports.